A Final Word
We have done much in this chapter. We began by examining the
important difference between positive and normative statements. We
then discussed why economists develop theories (or models) to help
them understand economic events in the real world. We have also
discussed how they test their theories and how there is a continual back-
and-forth process between empirical testing of predictions and refining
the theory. Finally, we devoted considerable time and space to exploring
the many ways that data can be displayed in graphs and how economists
use graphs to illustrate their theories.
Students are sometimes intimidated when first confronted with graphing
economic variables, but keep in mind that the graphing and the math we
use in the remainder of this book are no more difficult than what you
learned in high school. As we introduce some basic economic theory in
the next chapters, you will encounter many graphs (and a little algebra).
The best way to get comfortable with economic graphs is to practise
drawing them for yourself and to make sure you understand the variables
you are graphing and the relationships between them. A graph allows us
to see a visual representation of the economic theory we are learning
about and to visualize what happens when one or more of our variables
changes. A good graph can be worth a thousand words!