Social Science and Economic Concepts

The video explains the role of economists in studying human behavior and forming theories based on observations. It distinguishes between natural and social sciences, emphasizing that economics is a social science. The process of developing economic theories, such as demand theory, involves forming hypotheses, making predictions, and testing them with real-world evidence. The video also discusses exceptions to demand theory, like Giffen and Veblen goods, and highlights the importance of positive statements over normative ones in economics.

What distinguishes a social science from a natural science?

• Social sciences use experiments, while natural sciences use observations.

• Social sciences study the universe, while natural sciences study human behavior.

• Social sciences focus on human behavior, while natural sciences focus on the universe.

• Social sciences are based on opinions, while natural sciences are based on facts.

What is the main focus of economics as a social science?

• The study of natural phenomena

• The study of human behavior and choices

• The study of technological advancements

• The study of historical events

What is the first step in developing an economic theory?

• Creating a law

• Observing consumer behavior patterns

• Forming a hypothesis

• Testing predictions against evidence

How do economists test their predictions?

• By consulting experts

• By using computer simulations

• By collecting real-world evidence

• By conducting surveys

What happens if evidence does not support an economic prediction?

• The hypothesis is rejected

• The theory is immediately published

• The prediction is modified

• The hypothesis is accepted

What is a Giffen good?

• A good that people buy more of as its price increases

• A good that people buy less of as its price decreases

• A luxury good that people buy for status

• A good that is unaffected by price changes

What is a Veblen good?

• A necessity that people buy regardless of price

• A good that is unaffected by price changes

• A luxury good that people buy more of as its price increases

• A good that people buy less of as its price increases

Why are positive statements important in economics?

• They can be tested against evidence

• They are based on opinions

• They are always true

• They are easier to understand

Which of the following is a normative statement?

• The government should reduce taxes.

• When prices fall, demand increases.

• The unemployment rate is 5%.

• Inflation affects purchasing power.

What is the problem with normative statements in economics?

• They are based on evidence

• They cannot be tested

• They are always incorrect

• They are universally accepted