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Lecture One: Intro to Microeconomics

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ECON 1000
George Georgopoulos

Lecture One: Introduction to Microeconomics September 13, 2011 What is Economics? Economics: the social study that studies the choices that individuals, businesses, governments and Definition of Economics All economic questions arise because we want more tan we can get. Our ability to satisfy our needs and wants is called scarcity Because we face scarcity we are forced to make choices. The choices we make depends on the incentives we face. An incentive is a rewards that encourages an action or a penalty that discourages an action. Differences between Micro and MacroEconomics Micro: is the study of choices that individuals and businesses make, the way those choices interact in markets and the influence of governments Macro: the study of the performance of the national and global markets. Macroeconomics also deals with currency and money, whereas microeconomics does not. Nominal variables: variables that are expressed in terms of currency or money Two Big Questions of Economics How do choices end up determining what, how, and for whom good and services get produced? When do choices made in the pursuit of self-interest also promote the social interest? Negative externalities: when choices made in self-interest have negative consequences on society. Us
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