Introduction to Economics

What is Economics?

• Common misconceptions about economics:
  • Economics is the study of money.
  • Economics is another word for accounting.
  • Economics is hard, avoid the class.
• Classic definition: Economics is the study of the use of scarce resources that have alternative uses.
  • People have unlimited desires, but resources are limited.
  • Economics focuses on how people make choices about resource use.

Types of Economic Questions

• Positive Economics:
  • Describes what is.
  • Example: "Why do people use money?"
  • No value judgments involved.
• Normative Economics:
  • Argues for what ought to be.
  • Example: "Should people use money?"
  • Involves value judgments.

Branches of Economics

• Microeconomics:
  • Studies the behavior of individual agents and markets.
• Macroeconomics:
  • Studies the behavior of the entire economy.

Econometrics

• A branch of statistics specialized for analyzing economic data.
• Faces challenges due to real-world data, unlike controlled experiments.

Broad Application of Economics

• Economics tools are applicable beyond traditional markets.
  • Areas include crime, war, family, religion, culture, politics, law, and genetics.
• Economists often collaborate with other disciplines:
  • Psychologists, sociologists, criminologists, political scientists, anthropologists, biologists, neuroscientists, legal scholars.