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Econ Intro

Econ Intro

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Published by nosfan1019

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Published by: nosfan1019 on Mar 02, 2009
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10/17/2011

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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
 
 
Positive economics
- focuses upon that which is
o
What is" refers to economic study based upon observable and tested phenomenon
o
Cause and Effect
Based upon collected data, we know sales will rise 10% if prices are lowered 5%
o
Emphasis on reality; not opinion or conjecture
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
No one should pay more than 25% of their earnings in taxes
"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
Individual (referred to as consumer) level economic activity
Individual Firms Behavior
o
"The Firm" is generic term for a single business unit
Industry of similar firms
Single markets, comprised of individuals or firms within a similar business sector 
 
Macro economics
The economy at large
o
The nation's economy
o
World economic growth
An economic market not subdivided into industry groups
Issues may involve exchange rates, capital investment, mass labor markets, or trade.
 
Major concepts this course will cover
 
Economics discussions frequently revolve around recurring ideas and concepts.
The sooner you are able to understand them, the better you will understand the course material
 
Scarcity
How do we better describe our response to scarcity. If there exists something capable of relievingour cravings, then we have attained
Utility
 
= satisfaction of our want (good)
The car we drive to work
A new shirt that makes you feel stylish
Goods
= those items providing utility
To achieved the desired utility, we expend our available resources on goods.
o
These goods may be tangible or intangible
Tangible
Objects or specific service
Intangible
Happiness
Well-being
But if something causes us harm or dissatisfaction, we have then encountered a
"BAD"
o
Tangible
Pollution

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