ECON 2000 : ECON FINAL REVIEW
Document Summary
Economics is the study of how individuals and societies choose to use the resources that nature and previous generations have provided. Why study economics: to learn a way of thinking, to understand society, to understand global affairs, to be an informed citizen. Opportunity cost: the best alternative that we forgo. Microeconomics: deals with the functioning of individual markets and industries with the behavior of individual decision making units: business firms and households. Macroeconomics: looks at the economy as a whole. Positive economics: attempts to understand behavior and the operation of economies without making judgments about good or bad, divided into two parts, descriptive. Involves the compilation of data that accurately describe economic facts and events: economic theory, attempts to generalize and explain what is observed. Involves statements of cause and effect (action and reaction) Normative economics: looks at the results of economic behavior and asks whether they are good or bad and whether they can be improved.