What does it mean to say that economists use the scientific method? How do economists distinguish between models that work and those that don't?
What will be an ideal response?
The scientific method is the name for the ongoing process that economists and other scientists use to develop models of the world, test those models with data and evaluate how well they predict or describe behavior. While this process may not reveal the ‘true' model of the world, it does help in identifying models that are useful in understanding the world.
In order to decide whether models make accurate predictions or not, economists test them against real-world data. Data are facts, measurements, or statistics that describe the world. This process of testing models against data is called empiricism.
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Percentage markups are characteristically lower in supermarkets than in convenience stores because
A) convenience stores must charge high markups to compensate for low volume. B) marginal revenue is greater in supermarkets than in convenience stores. C) supermarkets are able to operate with a lower percentage return on investment. D) supermarkets can take advantage of quantity discounts. E) the demand curves of customers patronizing supermarkets tend to be more elastic.
International trade arises from
A) absolute advantage. B) comparative advantage. C) importation duties. D) the advantage of execution.