ed on positive analysis Why Study Economics1. To understand the world better- understand global and cataclysmic events such as wars, famines, epidemics- understand local problems; ex. Worsening traffic conditions in the city- tell us how many skilled therapists, ministers are available to help us2. To gain self-confidence- when you master economics, you gain a sense of mastery over the world, and thus over your own life3. To achieve social change- make the world a better place- help understand stand the origins of problems4. To help prepare for other careers- doctors need to understand how newer technology or changes in the structure if HMO’s will affect their practices5. To become an economistThe Methods of EconomicsModel: an abstract representation of realityA model should as simple as possible and still accomplish its purposeSimplifying assumption: any assumption that makes a model simpler without affecting any of its Important conclusionsEx. Assume that there are only two goods, two nationsCritical assumption: any assumption that affects the conclusions of a model in an important wayEx. We assume that firms will try to earn the highest possible profit...
