Theme 1
Microeconomics
,1.1 Nature of Economics
• 1.1.1 Economics as a Social Science
• 1.1.2 Positive and Normative Statements
• 1.1.3 The Economic Problem
• 1.1.4 Production Possibility Frontiers
• 1.1.5 Specialisation and the Division of Labour
• 1.1.6 Free Market Economies, Mixed Economy and Command
Economy
,1.1.1 (a) Thinking like an economist: the process of deve
models in economics, including the need to make assum
• The purpose of theories and models explain why the economy
behaves as it is
• Models can be used to show what has happened in the past or wha
will happen in the future
• Due to the huge amount of variables that can change when modeli
graphs, economists have to make assumptions
, 1.1.1 (b) The use of the ceteris
paribus assumption in building
models
• Economists use the term ‘ceteris paribus’ meaning ‘all other things
remaining equal’
• For example, an increase costs of production will cause a decrease
supply, ceteris paribus
Microeconomics
,1.1 Nature of Economics
• 1.1.1 Economics as a Social Science
• 1.1.2 Positive and Normative Statements
• 1.1.3 The Economic Problem
• 1.1.4 Production Possibility Frontiers
• 1.1.5 Specialisation and the Division of Labour
• 1.1.6 Free Market Economies, Mixed Economy and Command
Economy
,1.1.1 (a) Thinking like an economist: the process of deve
models in economics, including the need to make assum
• The purpose of theories and models explain why the economy
behaves as it is
• Models can be used to show what has happened in the past or wha
will happen in the future
• Due to the huge amount of variables that can change when modeli
graphs, economists have to make assumptions
, 1.1.1 (b) The use of the ceteris
paribus assumption in building
models
• Economists use the term ‘ceteris paribus’ meaning ‘all other things
remaining equal’
• For example, an increase costs of production will cause a decrease
supply, ceteris paribus
