lesson 1 - The Core Concepts in this lesson are: Scarcity...

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The Core Concepts in this lesson are: Scarcity Unlimited Wants Resources Opportunity Cost Self-Interested Behavior Why are some people rich and others poor? Why are the Japanese richer than the Mexicans? Why did the former Soviet Union dissolve into the loose union of states? Why do accountants earn more money than newspaper reporters? Why do some politicians attack the economic policy proposals of the President? Where do these conflicting policy proposals come from anyway? Why do some companies make lots of profits, while others file bankruptcy? And, perhaps most importantly, why can't you have everything you want–now? These are all important, personal, societal, even global issues. Economics can help you understand the answers to these and many other questions. What is Microeconomics?: Economics is the study of how people, individually and through institutions, make decisions about producing and consuming goods and services and how they face the problem of scarcity. The study of economics is divided into microeconomics and macroeconomics. Microeconomics describes the interactions of producers and consumers in individual markets, such as the market for cars. It also examines interactions between such markets, for example, the impact of changes in the demand for steel on the price of aluminum. The study of the economy as a whole is called macroeconomics. Macroeconomics is concerned with aggregates, or quantities whose values are determined by adding across many markets. Macroeconomics studies the behavior of variables that describe the whole economy, such as the value of the total output that the economy produces in a given time period. Macroeconomics also examines the behavior of such aggregates as the price level and total employment or unemployment. Values of these aggregates are derived from many individual markets taken together. In microeconomics the most important tools are demand and supply. Demand and supply help to explain prices and outputs in individual markets. In microeconomics, you may look at the demand for the output of a single industry, such as bicycle manufacturing. Microeconomics focuses on the consumption, production, and use of scarce resources by individuals and groups. Microeconomics is also concerned with the processes by which households and firms make decisions about the use of scarce resources. This definition of economics leads to some overlap with the other social sciences. Psychologists and economists share an interest in what causes people to take certain actions. However, economists are primarily interested in actions that are reflected in market activity or in economic decisions made through government. Sociologists are interested in all facets of organized human activity. Economists, however, are interested mainly in organized activities that relate to the production
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This note was uploaded on 01/13/2012 for the course ECON 2306 taught by Professor Kamara during the Spring '11 term at University of Texas at Austin.

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lesson 1 - The Core Concepts in this lesson are: Scarcity...

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