Hey there future economist, let's crack open the fascinating world of economics and how it's studied. We'll start by examining two main types of economics: positive and normative economics.

Positive economics is all about stating facts and being objective. It's like a detective series where economists are the sleuths, gathering clues, forming hypotheses, and trying to crack the case. When an economist says, "unemployment is rising," or "inflation will be over 6% by next year," they're making positive statements. They're like a crime scene investigator saying, "the footprints are fresh."

Now let's imagine how economists put on their detective hats

• Logic & Reasoning: Economists use logic and reasoning to figure out economic mysteries. Think Sherlock Holmes, but instead of crime scenes, they're puzzling over things like unemployment rates and inflation. They often use mathematical models as their magnifying glass.

• Hypotheses: These are like educated guesses or theories about what might be causing an economic phenomenon. For example, they might hypothesize that when people's incomes rise, they'll demand more goods and services. It's a bit like saying, "the footprints belong to a man weighing about 180 lbs."

• Empirical Evidence: This is where economists test their hypotheses against real-world data. They’re like detectives comparing the footprints at the scene to their suspect's shoes.

For instance, suppose supermarkets are selling more organic apples than before, and economists want to know why. They might hypothesize that if the price of organic apples is reduced, supermarkets will sell more. To test this, they would gather data on apple sales at different prices in various places and times. If the data matches their hypothesis, they give themselves a high-five and refine the hypothesis further. If it doesn't, they modify their hypothesis and test again.

• Theories & Models: Theories are well-substantiated explanations of economic phenomena. They're like our final detective report. Models are tools used to illustrate theories and relationships between economic variables. It’s like a sketch of the crime scene.

• Ceteris Paribus Assumption: This Latin phrase means "all else constant." It's like saying, "Let's assume the suspect didn't change shoes halfway through." Economists use this to focus on how changes in one variable might affect another.

• Refutation: If evidence doesn't support a theory or model, economists reject or modify it. Think of this as the courtroom part of our detective series. If the shoe doesn't fit, you must acquit!

Normative economics is about opinions and value judgments. It's more like a political debate than a detective show. Statements like "it's right to tax the rich more than the poor," or "the government ought to reduce inflation," are normative. They're like saying, "I believe the suspect is guilty because he had a motive."

Here are some things you should know about normative economics

• Value Judgments in Policy-making: Economists often make value judgments based on their personal beliefs or societal values. It's like our detective now becoming a policy advisor, suggesting changes based on their experience and judgment.

• Equity vs Equality: These are two terms that often cause confusion. Equality means everyone gets the same share of the income pie, like if you divided a pizza equally among friends. Equity, however, is about fairness. It's like if one friend helped make the pizza, they might deserve a larger slice. The catch is that fairness can mean different things to different people, just like some might think the pizza-maker deserves more, and others might not.

In conclusion, understanding these methodologies can help us make sense of economic issues. Just remember, whether we're talking about apples or incomes, the journey to understanding involves a blend of detective work (positive economics) and value judgments (normative economics). Now go ahead, put on your economist hat, and start solving those economic mysteries!