Chapter 1, Problem 18AA

To determine

Educated guesses made and tested by economists and other scientists.

Explanation of Solution

Economists and other scientists usually come up with an idea. For instance, an economist comes with an idea and asks the reason for an increase in demand sometimes, and thenmakes the hypothesis or guess that may be demand increases when the price decreases. Now, the hypothesis is ready. After that,the economist collects world data of demand and prices over a period of time and observes the relationship between them. If the relationship between demand and prices is the same as the hypothesis, it becomes a model.

Economics Concept Introduction

Introduction:

An educated guess and prediction about different variables is known as a hypothesis. First of all, a question is formed and then a guess is made about that. After making the guess, the same is tested using real-world data.