Economics is the study of how individuals and

societies choose to use the scarce resources that

nature and the previous generations have
provided.
There are four main reasons to study economics:
• To learn a way of thinking,
• To understand society,
• To understand global affairs, and
• To be an informed citizen
Three fundamental concepts that, once
absorbed, can change the way you look at
everyday choices: opportunity cost,
marginalism, and the working of efficient
markets.
The full “cost” of making a specific choice
includes what we give up by not making the
alternative choice.

The best alternative that we forgo, or give up,

when we make a choice or a decision is called
the opportunity cost of that decision.
Opportunity costs arise because resource are
scarce.

Scarce simply means limited.

The process of analyzing the additional or
incremental costs or benefits arising from a
choice or decision.
A market in which profit opportunities are
eliminated almost instantaneously.
Economists loosely refer to “good deal” or risk-free
ventures as profit opportunities.

For example, in grocery checkout registers, people

would flock to the shortest line until all the lines are
equalized. In this case, profit opportunity exists in
checkout lanes when one is shorter than the others.
Past and present economic decisions have an
enormous influence on the character of life in a
society.

Impact of economic change was most evident in

England during the late 18th and early 19th
centuries, a period we now call the Industrial
Revolution.
New manufacturing technologies and improved
transportation gave rise to the modern factory
system and a massive movement of the
population from the countryside to the cities.

Discipline of economics also began to take shape

during this period.
News headlines are filled with economic stories.

In a relatively open, market-oriented world it is

impossible to understand political affairs
without a grounding in economics.
A knowledge of economics is essential in being
an informed citizen. It is also essential in
understanding a range of everyday government
decisions at the local and federal levels.