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Lecture 1

ECON 101 Lecture Notes - Lecture 1: Decision Rule, John Maynard KeynesPremium

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ECON 101
Marina Adshade

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Jan. 06th, 2014
ECON 101 - Lecture #1 - Introduction and Basic Microeconomic Principles
The course will be using iClicker questions extensively
The most important strategy is to study independently
Defining Economics
Economics is “the study of mankind in the ordinary business of life” - Alfred Marshall
Economic principles are broadly applicable
Economics reaches more fundamental concepts, such as human nature, than
matters related to money and trade
Economics is “the study of how individuals and societies make choices about how to use
their scarce resources” - Anonymous
Allocation and organization of people and resources addressing the issue of
The Theory of Economics does not furnish a body of settled conclusions immediately
applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a
technique of thinking which helps its possessor to draw correct conclusions. - John
Maynard Keynes
Economics does not tell one facts and conclusions
Economics is a method of analysis; a study which can help the thinker to reach
certain conclusions
It is a tool of analysis
Scarcity and Choice
The central issue that led to the creation of economics is the problem of scarcity
Assume that human wants and desires are infinite, and resources are finite -
scarcity must exist, and there must be some way of organizing the resources
What is the difference between want and need?
The boundary is blurry - no need to set a clear definition
Economics gives us a framework for thinking about
Why we allocate our scarce resources the way we do
How we should allocate our scarce resources to best meet our wants and needs
Principle 1: People Face Tradeoffs
To get one thing, we usually have to give up something else:
Obtaining a degree
Buying a book
Expanding the Skytrain system
All of the examples obtain one thing in exchange for money, time, and resources
So people, organizations and societies usually face trade-offs when making choices
How should/do people make those decisions?
Should is different from do
Economic theories are generally different from real life applications
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