lnc1 - Notes #1: Introduction and the Four Factors of...

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Notes #1: Introduction and the Four Factors of Production 1. Introduction A. Why Study Economics? Many non-economists--and some economists--berate economics as being unnecessarily difficult. Real-world economic problems, some people contend, can be solved using nothing more than common sense. There’s even an economics textbook on the market subtitled “The Science of Common Sense.” This is just silly. In economics, common sense alone, without a clear grasp of a theory that can help make sense of complicated problems, usually leads to erroneous and sometimes destructive conclusions. In his influential work Principles of Economics , first published in 1890, the great English economist Alfred Marshall wrote: It is doubtless true that much of the [study of economics] has less need of elaborate scientific methods, than of shrewd mother- wit, of a sound sense of proportion, and of a large experience of life. But on the other hand there is much work that is not easily to be done without such machinery. Natural instinct will select rapidly, and combine justly, considerations which are relevant to the issue at hand; but it will select chiefly from those which are familiar; it will seldom lead a man far below the surface, or far beyond the limits of his personal experience. . . . “That which is not seen” is often better worth studying than that “which is seen.” Especially this is the case if we are . . . concerned less with immediate causes, than with the causes of causes . . . even a business training does not always lead a man to search far for those causes of causes, which lie beyond his immediate experience . . . For in doing that, everyone must perforce rely on the powerful machinery of thought and knowledge that has been gradually built up by past generations . (8th ed., p. 642) " That which is seen, and that which is not seen;" here Marshall quotes Frédéric Bastiat, (in a pamphlet of that title, which is assigned reading for Chapter 2) and before him, St. Paul (2 Corinthians 4). That which is seen, that is, the "facts" that jump in our faces, or are thrown in our faces, frequently are pretty worthless in trying to figure out what is going on around us. Some people say, "Let the facts speak for themselves." The problem is, the facts are usually silent. 1 It's not enough to know the facts; you need to know how the facts are related, and which facts matter and which ones don’t. In order to think clearly about economics, you will need more than a clear mind! You will need to learn a way of thinking about economic issues that will let you see the hidden things, that will let you "peel the onion" and get to the facts, and the relationships between facts. Learning these things is the purpose of this course. Learning to see, and understand, "that which is not seen" will be the primary goal of this course.
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This note was uploaded on 11/23/2011 for the course ECON 231 taught by Professor Staff during the Fall '09 term at Calhoun Community College.

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lnc1 - Notes #1: Introduction and the Four Factors of...

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