Lesson 1.1.1 Economics

• Economics deals with every aspect of people's lives
• Studying economics is broken down into meaningful portions, ranging from simple theories and explanations to very complex; from actions of one person to the reaction of the whole world
• Economics uses statistics, graphs, images, models theories, principles, laws and reforms
• Rational decision maker


  Enabled by studying economics
• Critical thinkers


  Enabled by studying economics
• Microeconomics


  • Concerns itself with the behavior of small, individual economic units
  • Deals with individual household, business firms, and industries
  • Example: consumption by a particular household or production of a particular firm
• Macroeconomics


  • The study of economy as a whole
  • Concerned with total or aggregate economy
  • Includes topics such as national income, unemployment in the economy, economic growth
• Normative economics


  • A statement of 'what ought to be'
  • A statement of one's value judgment or personal opinion of what should be done
• Normative economics


  • Income inequalities should be reduced
• Positive economics


  • A statement of 'what is'
  • Based on facts and supported with evidence
  • A statement of a value free nature
• Economists in general favor a positive approach to economics, so as to preserve the integrity of economic analysis and decision-making
• Positive economics


  • Income inequality exists in all countries
• Economic variables


  Any measurement that helps to determine how an economy functions
• Economic variables


  • population
  • poverty
  • inflation
  • unemployment
  • GDP
• Generalization


  Broad statement or an idea that applies to a group of people or things
• Rational choice


  Individuals make wise and logical decisions
• Scarcity


  Fundamental economic problem of having seemingly unlimited human wants in a world of limited resources
• Value judgment


  An assessment of something as good or bad in terms of one's standards or priorities