Chapter01 - Chapter 1 What Is Economics? Contents: General...

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Chapter 1 What Is Economics? Contents: General Overview Major Areas of Economics Economic Research in Agricultural and Natural Resources Biology and Economics Economics in the Policy Process The Economics Profession Subdiciplines of Environmental and Resource Economics General Overview Economics analyzes and evaluates what people produce and consume; the patterns of trade (what is bought and sold and at what price); and how time is allocated, income is distributed, and wealth is accumulated. Economics also analyzes the behavior of individuals (consumers, producers, and farmers), institutions, nations, and the global economy. Economic research is both positive (explains behavior) and normative (evaluates outcomes and presents policies to improve the situation). The key assumption in economics is that individuals are rational and pursue self- interest. Economics tries to predict behavior based on these assumptions under alternative conditions. Economists put much effort in understanding the behavior of prices and performance of markets. Economists also analyze outcomes under alternative legal systems, property right regimes, and community arrangements. Understanding and comparing performances of alternative institutions is a major interest to economists. Major Areas of Economics Microeconomics: Studies the behavior of individuals (consumers, firms) and their interactions within markets. Provides basic theory to the more applied field. Macroeconomics: Analyzes the performances of the economy as a whole. Attempts to understand and predict unemployment and inflation rates and the causes of recession and depression. It also provides the foundation for government intervention in the economy. International Trade : Analyzes exchange between countries. It explains patterns of export and import, relative strength of currencies, etc. Public Economics : Analyzes when and how the government should interfere in the economy to finance government. It develops methodologies for assessing public projects and compares the performance of alternative taxation schemes. Development Economics : Studies economies in less-developed countries. Tries to analyze issues of poverty, industrialization, and agricultural reform. Industrial Organization : Studies the behavior of industries with noncompetitive
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-2- markets. Analyzes the behavior of companies with market power in terms of product development, promotion, pricing, and sales and especially interested in the interaction between firms. Game Theory : A new conceptual approach to studying strategic behavior in the economy. It plays a growing role in industrial organization and the branches of economics. Econometrics : Develops methodologies to apply statistical techniques to analyze economic issues. Econometrics is used to provide estimates of economic variable and to test economic theories.
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This note was uploaded on 11/16/2008 for the course ECON 101 taught by Professor Wood during the Spring '07 term at University of California, Berkeley.

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Chapter01 - Chapter 1 What Is Economics? Contents: General...

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