ECONOMICS 101 INTRODUCTORY MICROECONOMICS
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ECONOMICS 101
INTRODUCTORY MICROECONOMICS
INTRODUCTION
Fundamental Concepts
Economics & Its Fundamental Concept
The fundamental concept of economics is scarcity
Scarcity: resources are limited relative to our wants
Scarcity compels us to make choices
Economics: the study of how individuals and societies manage scarce resources (i.e. finds the best allocation of our scarce resources)
Two Main Branches of Economics
Economics can be divided into two main branches:
Microeconomics: studies the decision-making of individuals and firms and how these decisions are coordinated in markets
Economics can be divided into two main branches:
Macroeconomics: studies economy-wide phenomenon, such as aggregate production, unemployment, and inflation
Classify each of the following as a topic of microeconomics or macroeconomics:
the effect of tax policy on the hiring decisions of small business
the effect of the housing market crash on GDP
the impact of tuition cost on college attendance
the central bank’s decision to raise interest rates
the effect of social security on the retirement decisions of workers
2023-12-28