Chapter 1: Introducing the Economic Way of Thinking

LEARNING OBJECTIVES
The steps to achieve the learning objectives include reading sections from your textbook and the
causation chain game, which is available directly on the Tucker web site. The steps also include
references to Ask the Instructor Video Clips, the Graphing Workshop available through
CourseMate on the Tucker website.
#1 - Understand that economics is the study of scarcity and decision making.
Step 1

Read the sections in your textbook titled The Problem of Scarcity, Scarce Resources
and Production, and Economics: The Study of Scarcity and Choice.

Step 2

Listen to the Ask the Instructor Video Clip titled Why Is Economics Difficult for a lot
of Students? You will learn that economics relates to the real world using graphs and the
jargon of economics.

Step 3

Listen to the Ask the Instructor Video Clip titled What is Macroeconomics? You
will learn topics studies under macroeconomics.

The Result

Following these steps, you have learned that scarcity forces people to make economic
choices, and you will be able to define resources including, land, labor, and capital. You
have also learned that microeconomics examines individual markets, and
macroeconomics takes an aggregate view of the whole economy.

#2 - Know how economists use a model to explain the relationship between variables, and understand
pitfalls of economic reasoning.
Step 1

Read the section in your textbook titled The Methodology of Economics, Hazards of
the Economic Way of Thinking and Why Do Economists Disagree?

Step 2

Play the Causation Chains Game titled The Steps in the Model-Building Process.

Step 3

Listen to the Ask the Instructor Video Clip titled Why Do Economists talk about
Money and Wealth? Do They Really Believe that People Are Motivated only by Money?
You will learn that economists use only models with measurable data.

Step 4

Listen to the Ask the Instructor Video Clip titled Have Computers Affected Worker
Productivity? You will learn the difference between association and causation.

The Result

Following the steps, you have learned that economists use models to reach conclusions
that can be measured by abstracting from reality and holding other factors constant. You
have also learned that failing to hold other factors constant (ceteris paribus assumption)
or confusing association and causation results in flawed economic reasoning. You also
know that positive economics is based on testable statements and normative economics is
based on opinions.