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What Economics is about
 
Economics
- The science of scarcity; the science of how individuals and societies deal with the fact thatwants are greater than the limited resources available to satisfy those wants.
 
Topic Definitions
Opportunity Cost
 
- The most highly valued opportunity or alternative forfeited when a choice is made.
Scarcity
 
- when wants exceed our ability to satisfy
Decisions at the Margin
 
- Decision making characterized by weighing the additional (marginal) benefitsof a change against the additional (marginal) costs of a change with respect to current conditions.
Efficiency
 
- Exists when marginal benefits equal marginal costs
Equilibrium-
 
Equilibrium means "at rest"; it is descriptive of a natural resting place
Ceteris Paribus
- A Latin term meaning "all other things constant," or "nothing else changes." 
•
A condition faced by living creatures since the dawn of time
o
Nog the caveman dreams of sitting in a cave full of meat, but it takes too long to make thenumber of arrows needed
o
Several investment bankers are allotted a designated portion of an IPO for selling to retailcustomers, creating a backlog of orders.
Through study of society's response to scarcity, the field of Economics is born
 
Positive vs. Normative Economics
 
 
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Positive economics
- focuses upon that which is
o
What is" refers to economic study based upon observable and tested phenomenon
o
Cause and Effect
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Based upon collected data, we know sales will rise 10% if prices are lowered 5%
o
Emphasis on reality; not opinion or conjecture
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Normative economics
- is concerned with what should be
o
"what should be" refers to that study concerned with advancing ideals and values
o
More philosophical than empirical
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No one should pay more than 25% of their earnings in taxes
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"Why"
Because any more than that goes against the idea of small government and adynamic free market.
 
Microeconomics vs. Macro
 
o
Microeconomics
- is concerned with the primary elements of an economy; that is, anindividual, a firm, a particular industry, or specific market
o
Macroeconomics
- studies the economy as a whole, firms and individuals reacting to scarcityin the collective sense. 
Micro economics
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Individual (referred to as consumer) level economic activity
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Individual Firms Behavior
o
"The Firm" is generic term for a single business unit
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Industry of similar firms
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Single markets, comprised of individuals or firms within a similar business sector 
 
Macro economics
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The economy at large
o
The nation's economy
o
World economic growth
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An economic market not subdivided into industry groups
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Issues may involve exchange rates, capital investment, mass labor markets, or trade.
 
Major concepts this course will cover
 
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Economics discussions frequently revolve around recurring ideas and concepts.
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The sooner you are able to understand them, the better you will understand the course material
 
Scarcity
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How do we better describe our response to scarcity. If there exists something capable of relievingour cravings, then we have attained
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Utility
 
= satisfaction of our want (good)
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The car we drive to work
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A new shirt that makes you feel stylish
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Goods
= those items providing utility
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To achieved the desired utility, we expend our available resources on goods.
o
These goods may be tangible or intangible
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Tangible
Objects or specific service
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Intangible
Happiness
Well-being
•
But if something causes us harm or dissatisfaction, we have then encountered a
"BAD"
o
Tangible
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Pollution
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hyungu kim

Thank you very much^^ Bless u

reply12 / 11 / 2009
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