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NCSU EC-202 PRINCIPLES OF MACROECONOMICS Department of Economics Summer II 2008 CHAPTER 1 Economics: Foundations and Models. Economics: Foundations and Models. 1. Reasons to study economics: Understand what’s going on. Make right decisions. Prepare for other careers. To be an informed voter. Become an economist :) 2. Scarcity and economics as a science. People must make choices as they try to attain their goals. The choices people make reflect the trade-offs made necessary by scarcity. Scarcity is the situation in which unlimited wants exceed the limited resources available to fulfill those wants. Economics is the study of the choices people make to attain their goals, given their scarce resources. An economic model is a simplified version of reality used to analyze real world economic situations. 3. Markets A market is a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade. The image many people have of a market is a supermarket, neighborhood store or shopping mall. But some markets do not have an easily identifiable image. Many people make online purchases with their computers. In these markets buyers and sellers do not see each other and may be located hundreds of miles from one another. For some goods (for example, books and CDs) is it not necessary for buyers to see or test merchandise before they buy it. For other goods (clothing, food, automobiles) some personal contact is important. In
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This note was uploaded on 04/21/2009 for the course EC 202 taught by Professor Sturgill during the Spring '07 term at N.C. State.

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