Economics Lecture Notes

Key Concepts

Choice over Money:
- Choice is the unifying feature in economics, not money.
- Economics involves decision-making with limited resources.
Scarcity:
- Fundamental economic problem: scarcity of resources (copper, water, time).
- Choices must be made on how to use these limited resources.
Economic Behavior:
- Economic behavior includes budgeting, price hunting, and personal decisions like paint color.
- Economics studies choices at every level, as each choice involves resource use and opportunity costs.

Microeconomics:
- Study of individual, business, and government choices.
- Focuses on prices, resource allocation, and impacts on well-being.
Macroeconomics:
- Study of economy-wide phenomena.
- Includes economic growth, inflation, and unemployment.
- Economic growth began in 1800s, leading to cycles of booms and busts.

John Neville Keynes' Distinction:
- Positive Economics: fact-based, objective study of what is.
- Normative Economics: subjective judgement on what should be.
- Example: Income taxes disincentivize work (positive); call to lower taxes (normative).
Art of Economics:
- Relating lessons from positive economics to normative goals.
- Involves decoupling (isolated analysis) and contextualizing (considering implications).
- Example: Minimum wage and unemployment; supply and demand analysis vs implications on poverty.

Objective of Economic Courses:
- Teach students the art of thinking like an economist.
- Understanding economics aids in rational decision-making.
Impact of Economics Knowledge:
- Helps in achieving personal and professional goals.
- Useful in various domains including company management, personal relationships, and social justice.
Assumptions in Economics:
- Initial assumption: people are rational.
- Learning economics encourages rational thinking and systematic goal achievement.

Studying economics provides tools to unlock world mysteries instrumentally.
Understanding economics is beneficial in a wide range of fields and personal endeavors.