Economics is the scientific study of scarce resources and how individuals and groups use and exchange them. As a social science, economics uses scientific methods like observation and deduction to build models and theories to explain human behavior, rather than experiments. Economists employ different methods than natural scientists due to the inability to conduct controlled experiments with people. Economics has become more specialized over time into areas like microeconomics, macroeconomics, and financial economics, all with the goal of understanding exchange and its costs and benefits.

1. ECONOMIC
METHODOLOGY

2. Economics as a social science
• Economics is the scientific study of the ownership, use, and exchange
of scarce resources – often shortened to the science of scarcity.
• Economics is regarded as a social science because it uses scientific
methods to build theories that can help explain the behaviour of
individuals, groups and organisations.
• In terms of methodology, economists, like other social scientists, are
not able to undertake controlled experiments in the way that
chemists and biologists are. Hence, economists have to employ
different methods, based primarily on observation and deduction and
the construction of abstract models.

3. • As the social sciences have evolved over the last 100 years, they have
become increasingly specialised. This is true for economics, as witnessed
by the development of many different strands of investigation
including micro and macro economics, pure and applied economics,
and industrial and financial economics. What links them all is the attempt
to understand how and why exchange takes place, and how exchange
creates benefits and costs for the participants
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mics.html/#:~:text=Economics%20is%20the%20scientific%20study,of%20in
dividuals%2C%20groups%20and%20organisations.

4. Short run, Long run, Very long run
• The short run: The period of time over which at least one factor is fixed.
• In the S/R, the firm can increase output by increasing the variable factor –
e.g. for a textile factory, hiring more crew, buying more fuel, buying more
cotton etc.
• The long run: The period of time long enough for all factors to be varied.
• In the L/R, the firm can increase output by increasing all factors - buying
more land, building more factories, installing new machines, buying more
raw materials etc.
• In the very long run, the state of technology can change. E.g. a bank can
move from a paper – based system to a completely electronic paperless
system.