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Econ_100_Intro (1) - ECON 100 Introduction to Microeconomic...

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ECON 100: Introduction to Microeconomic Theory Lecture 1 Yilan Xu
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The Economic Problem Wants, desires: unlimited Resources: scarce Ex: Time, natural resources, labor effort, capital are limited Economics How people use scarce resources to satisfy unlimited wants •2
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Microeconomics and Macroeconomics Microeconomics is the study of how households and businesses make choices, how they interact in markets, and how the government attempts to influence their choices. Macroeconomics is the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
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The Science of Economic Analysis Economic theory / model Simplification of economic reality Important elements of the problem Make predictions about the real world Good theory Guide Sort, save, understand information •4
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Understand the role of models in economic analysis Models are simplified versions of reality used to analyze real-world situations. To develop a model, economists generally follow five steps. Decide on the assumptions to be used in developing the model. Formulate a testable hypothesis. Use economic data to test the hypothesis.
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