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ECN 203 (1), Introduction

ECN 203 (1), Introduction - pursuing a given choice or...

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The Study of Economics
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The Study of Economics ❚ Economics -- The study of the production, allocation, and distribution of (limited) resources to most efficiently meet (unlimited) human wants and needs.
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Macroeconomics ❚ Microeconomics -- The study of economic decisions of individuals and firms. ❚ Macroeconomics -- The study of economic decisions in the economy as a whole (aggregates or totals).
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Scarcity – A Fundamental Economic Property ❚ Key – Resources are finite or scarce , especially relative to human wants and needs. ❚ Resources -- money -- time -- environmental resources
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Scarcity and Opportunity Cost ❚ Opportunity Cost – The cost of
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Unformatted text preview: pursuing a given choice or decision, based upon the best alternative given up. Using scarce resources in everything we do. Economic Decisions: Theories and Models Theory-- An assertion about the major causes of a given behavior, done in order to predict outcomes. Model-- A formalization of a theory, done to make concise predictions . The Role of Assumptions Theories and models make simplifying assumptions The assumptions emphasize the main causes without making the theory/model overly cumbersome. Evaluating a theory and model: How closely do these assumptions approximate reality?...
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