1.1.1 Economic as a social science

• Economists develop models to explain how the economy works , for example theories of supply and demand or the circular flow of income.
• Economists develop models by putting forward a model (postulates), gathering evidence and then accepting, changing or disregarding the model.
• Theories that gain universal understanding are known as laws e.g law of gravity
• theories can often be expressed in words whilst models, because they require greater precision, are expressed in mathematical terms.
• Economics is a social science as it is difficult use a scientfic method as There are too many variables(establish control groups, keep factors constant, interpreting data) which can change within an economic model and so assumptions​ must be made.
• All sciences make assumptions when developing models and theories, and this allows them to simplify the problem. Economists use the term ‘​ceteris paribus​’ meaning ‘all other things remaining equal’. For example, ​when there is a change in income, demand will shift, ceteris paribus.
• • economics is a ​social science and so, unlike with natural sciences like physics and chemistry, it is ​difficult to set up experiments to test hypothesis​. As the economist has to gather data in the ordinary, everyday world, ​other variables are always changing so it difficult to decide whether or not evidence supports or disagrees with a hypothesis. Therefore, economists tend to come up with very different conclusions for a particular set of data.
• Some people argue economics is ​not a science because it studies human behaviour and human behaviour cannot be reduced to scientific law. However, groups of individuals are much more predictable than individuals themselves, and much of economics deals with groups rather than individuals.
• the main assumptions: individuals make rational choices, individuals seek to maximise utility, individuals act on basis of full and relevant imformation