Economic unit 1.1-1.2 economic methodology and economic problem

1.1 Economic Methodology and the Basic Economic
Problem
Economics as a Social Science

, Economics as a Social Science

• Economics studies the choices people
take under the conditions of scarcity and
uncertainty
• Because Economics is a social science we
can never be sure of the way in which
people and businesses will respond to Consumer Behaviour
the changing circumstances around them
• Traditional economic theory has
assumed that consumers seek to
maximise their own satisfaction and that
businesses aim to maximise profit
• But new theories including Behavioural
Economics suggest alternatives and
focus on the social aspect of our Business behaviour
behaviour in day to day life