1.1.1 Economics as a social science

• + of Ceteris Paribus assumption

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  • simplifies complex economic relationships to make them more understandable
  • helps identify cause-and-effect relationships between variables
• -'s of Ceteris Paribus assumption

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  • In the real world, it's challenging to hold all variables constant (e.g. behavioural economics)
  • Changes in one variable leads to changes in others, making isolation difficult
  • You may want to analyse how multiple variables interact simultaneously
• + of Economic Models

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  • provide a framework for understanding
  • allow economists to make predictions, test theories and guide policies
• -'s of Economic Models

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  • they are simplifications for reality and may not capture all complexities
  • assumptions can be unrealistic, leading to inaccurate predictions