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NATURAL SELECTION: The notion that firms best suited to the economic environment on the ones that tend to survive. The natural selection of business firms is an adaptation of the biological process of natural selection, in which biological entities best suited to the natural environment are the ones that survive. The notion of natural section suggests that even if firms do NOT actively, consciously pursue the profit-maximization goal, assuming they do is not necessarily unreasonable. Those firms that approximate the goal of profit-maximization, whether intentionally or accidently, are the ones most likely to survive and remain in business.
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Lesson 2: Economic Science | Unit 3: Verification
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Page: 12 of 20
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- How an hypothesis is verified using real world data.
- Ways to obtain data that can be used to test an hypothesis.
- The importance of the ceteris paribus assumption that other factors remain unchanged when testing an hypothesis.
- What it means to the scientific method when an hypothesis does and does not agree with real world data.
- How continually testing an hypothesis that agrees with real world data eventually gives us a principle.
- Why an hypothesis that does not agree with real world data can be just as valuable to the scientific method as one that does not.
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OPPORTUNITY COST, PRODUCTION POSSIBILITIES The production possibilities analysis, which is the alternative combinations of two goods that an economy can produce with given resources and technology, can be used to illustrate opportunity cost--the highest valued alternative foregone in the pursuit of an activity.
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In his older years, Andrew Carnegie seldom carried money because he was offended by its sight and touch.
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"Advice is like snow ‚ the softer it falls, the longer it dwells upon and the deeper it sinks into the mind. " -- Samuel Taylor Coleridge, poet
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JLE
Journal of Law and Economics
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