WHAT’S NEW IN THE SEVENTH EDITION: There is a new In the News feature on "Actual Economists and Virtual Realities." Figure A-1 has beenupdated. LEARNING OBJECTIVES: By the end of this chapter, students should understand:  how economists apply the methods of science.  how assumptions and models can shed light on the world.  two simple models—the circular flow and the production possibilities frontier.  the difference between microeconomics and macroeconomics.  the difference between positive and normative statements.  the role of economists in making policy.  why economists sometimes disagree with one another. CONTEXT AND PURPOSE: Chapter 2 is the second chapter in a three chapter section that serves as the introduction of the text. Chapter 1 introduced ten principles of economics that will be revisited throughout the text. Chapter 2develops how economists approach problems while Chapter 3 will explain how individuals and countriesgain from trade. The purpose of Chapter 2 is to familiarize students with how economists approach economic problems. With practice, they will learn how to approach similar problems in this dispassionate systematicway. They will see how economists employ the scientific method, the role of assumptions in model building, and the application of two specific economic models. Students will also learn the important distinction between two roles economists can play: as scientists when we try to explain the economic world and as policymakers when we try to improve