1.1 Nature of economics

1.1.1 Economics as a social science

   Key points

• Economics is generally classified as a social science and uses the scientific method as the basis for its investigation
• Economics is the study of how groups of individuals make decisions about the allocation of scarce resources 
• Economists build models and theories to explain economic interactions 
• The ceteris paribus assumption is used in building models
• Positive economics deals with statements of 'fact' that can either be refuted or supported. Normative economics deals with value judgements, often in the context of policy regulations