We will use these notes in place of a text.
They are less polished than a text, but I hope
they are helpful.
The text refers to colors in the graphs, but your graphs may be in grayscale.
Thinking Like an Economist.
Most microeconomics textbooks have one to three chapters of introductory material,
which can be depressingly long.
Usually these chapters are designed to (i) motivate you to study
economics, (ii) give you background information about the field, and (iii) teach you lots of
terminology and general concepts.
I prefer to introduce most of the terms and concepts as we go
along, but it does make sense to provide some (brief) background.
That is the purpose of this
first chapter of the notes.
The questions of economics.
Economics is mainly concerned with the material
organization of society.
Economists want to understand what gets produced, how it gets
produced, how wealth is distributed, prices, business cycles, economic growth, etc.
economics goes beyond material issues.
Economists use their analytical tools to study more
general questions of individual behavior and social organization, such as political processes and
the evolution of culture.
Economics as science.
The scientific aspect of economics.
Like all scientists, economists try to develop theories
that generate testable predictions.
For instance, a theory about prices may predict which
circumstances cause prices to rise.
To test the predictions, economists do
which use data from the real world.
If the predictions are frequently wrong, then (we hope that)
the economists try to improve the theory.
The process of making predictions, testing the
predictions empirically, and refining theories in response to the empirical results, is loosely
Making predictions is an essential part of science, and prediction is
what makes science useful.
The theory of biological evolution predicts that colonies of fruit flies
exposed to certain kinds to adverse environmental conditions will, over many generations,
develop a tolerance for those conditions.
It may also predict that fossils of certain kinds will be
found in certain locations and not others.
Such predictions, and the process of testing and
refining those predictions, mean that evolutionary theory is a science.