02 - Economics

02 - Economics - Introduction Economics is the study of the...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Introduction Economics is the study of the allocation of scarce resources. Economists study how people allocate their limited resources to satisfy their unlimited wants. The ultimate purpose of economics is to understand choice. An economic geographer, therefore, would be interested in studying how people allocate their limited resources to satisfy their unlimited wants, but from a geographic viewpoint. His concerns would focus on how people earn their living, how economic systems vary from place to place, and how economic activities are spatially interrelated and linked. Economists often draw upon ideas or information from other disciplines to help them understand economic behavior better. Therefore, the issues that economists study are often interconnected and related to other social sciences such as political science, sociology, psychology, anthropology, and geography. Economics is divided into two schools, Microeconomics and Macroeconomics. Microeconomics is the part of economic analysis which studies individual decision making undertaken by individuals (or households) and by firms. Macroeconomics is the part of economic analysis which studies the behavior of the economy as a whole. It deals with economywide phenomena such as changes in unemployment, the general price level and national income. The Economic Person Economists assume that individuals act as if they are motivated by self-interest and respond predictably to opportunities for gain. The rationality asumption says that individuals act as if they were rational. They will not intentionally make decisions that would leave them worse off. Self-interest is a goal that makes individuals feel better off. In economic analysis these goals are often those which can be measured in monetary terms, although the pursuit of other goals such as prestige, love, or power can be analyzed using this concept. Economics as a Science Economics is a social science that utilizes the same types of methods used in biology, chemistry and physics. Economic models or theories, which are simplified representations of the real world, are developed and used as aids in understanding, explaining and predicting economic phenomena in the real world. A model should capture the essential relationships that are sufficient to analyze the specific problems or answer the specific question being asked. No economic model is complete in the sense of capturing every detail and relationship that exists. A model is by definition an abstraction from reality. This does not mean that models are deficient simply because they are unrealistic and use simplified assumptions. Every model in every science requires
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
simplification compared to the real world. The
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/22/2008 for the course SOC 321 taught by Professor Reiter during the Fall '08 term at Ohio State.

Page1 / 13

02 - Economics - Introduction Economics is the study of the...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online