Economics:

The social science that deals with the production, distribution, and consumption of goods and
services and with the theory and management of economies or economic systems.

Economics is a study of mankind in the ordinary business of life. It examines that part of
individual & social action which is most closely connected with the attainment & with the use of
material requisites of well-being. thus, it is on one side the study of wealth and on the other
important side it is the study of man." (Alfred Marshall)

Economic methodology
Economic Methodology is the study of scientific method in relation to economics, including
principles underlying economic reasoning. Economic methodology, broadly conceived, that how
economics functions, how it could function, and how it should function and of the various
presuppositions and conditions of all these. It examines

1. Theoretical key concepts

 Theory and model
 Assumption and idealization

2. Fundamental substantial concepts.

 Rationality
 Institution
 Evolution
 Coordination

Economic Methodology provides an accessible introduction to the subject-matter of and

literature on the methodology of economics. It presents issues in economics in order to
demonstrate the need for methodological awareness and debate. The core of the book
then explains the content and development of thought in methodology in relation to
issues in economics, with a special emphasis.
ECONOMICS AS A SCIENCE
Economics is the study of man and his activities in relation to his environment. The
study of ends and scarce means which studies alternative uses. Economics is a social
science because it studies human environment, there is no specific (physical)
laboratory. if we want to test anything concerning with economics, then we survey and
taking primary and secondary data and analyze the things and it is carried out on the
society. thus, society is the laboratory for any test of the subjects concerning with
economics.

Most subjects in the sciences have a constant/specific way of carrying out their
activities. For instance, to test the pH level of a matter requires a particular method,
unlike in economics where the issue of unemployment solved in China differs from the
way it will be addressed in Nigeria. Economics deals with the study of the environment
in diverse ways, hence it is a social science.

What is the role of an assumption in an economic theory?

That other forces or social conditions will not affect the theory. Like the assumption in economics that
people will react in a prudent and reasonable manner to maximize their incomes etc. Obviously people
don't always act in a prudent manner or necessarily in their own best interest as they often times do not
have perfect information.

The statement is either Positive or Normative Statements?

An increase in the minimum wage will cause a decrease in employment among

the least-skilled.(POSITIVE)

Higher federal budget deficits will cause interest rates to increase.(POSITIVES)

The income gains from a higher minimum wage are worth more than any slight
reductions in employment.(NORMATIVE)

State governments should be allowed to collect from tobacco companies the

costs of treating smoking-related illnesses among the poor.(NORMATIVE)