Introduction to Economics
Economics – a social science that studies the choices of people faced with scarcity.
• Macroeconomics – studies the economy as a whole
• Microeconomics – looks at the individual components (household or firm) within
the larger economic system.
Economic Perspective
• Scarcity and Choice – unlimited needs and wants and limited resources; because
of scarcity choices must be made which leads to opportunity costs ( what you give
up or forgo to get the next best thing) , “There is no such thing as a free lunch
• Rational Behavior – making decisions to achieve the maximum fulfillment of
your goals, so based on different preferences and circumstances all decisions will
not be the same
• Marginal Benefit/Marginal Costs – extra or additional, Rule MB = MC
Positive vs. Normative Economics
• Positive based on facts
• Normative based on your opinions
Economic Resources
• Land – any gifts from nature used in the production process
• Labor – physical and mental abilities used in the production process
• Capital – physical – tools and machinery used in the production process; human –
knowledge and skills acquired by the worker through their education and