Chapter 1 Economics and Economic Reasoning

Chapter 1 Economics and Economic Reasoning - Chapter 1:...

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Chapter 1: Economics and Economic Reasoning Economics is the study of how human beings coordinate their wants and desires, given decision making mechanisms, social customs, and political realities of the society. Problem: What and how much to produce? How to produce it? For whom to produce it? Human beings are greedy – scarcity forces us to reconsider our individual desires. Scarcity adjusts to the environment either physically or innovatively Coercion is the mechanism that limit people’s want – it expands into the alternative definition of economics forcing us to sacrifice for our wants. In early times economics was based on deduction – a method of reasoning in which one deduces a theory based on a set of almost self-evident principles – causes too many theoretical problems based on human’s ability to rationalize and create self interest. Modern economics now based on both deduction and induction – a method of reasoning in which one develops general principles by looking for patterns in data – a.k.a. analysis. Induction’s is capable because of technology’s expansion Thinking like an economist – evaluating cost and benefits Drug dealers and their Mamas Marginal cost is the additional cost to the ones already incurred.
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This note was uploaded on 02/23/2011 for the course ECON 2010 taught by Professor Moonjung during the Spring '09 term at UVA.

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Chapter 1 Economics and Economic Reasoning - Chapter 1:...

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