Notes on Introduction to Economics

Professor Introduction

• Name: Mark Berkey
• Affiliation: North Carolina A&T State University
• Topic: Overview of Economics

What Economics Isn't

• Not:
  • Study of money
  • Study of the stock market (related to finance)
• Economics does study the economy, but it encompasses more than just that.

Definitions of Economics

1. Bert Bowden's definition:
   • Economics is the science of common sense.
   • Half of what you need to know to be an economist is common sense.
2. Textbook Definition (McConnell, Brew, and Flynn):
   • Economics examines how individuals, institutions, and society make choices under conditions of scarcity.

Key Concepts in Economics

• Scarcity:
  • Not just about rarity; it refers to the unlimited wants of humans versus limited resources.
  • Focus is on wants rather than needs.
  • Example: Even the richest people have unlimited wants (e.g. Bill Gates wanting more money).
• Choices:
  • When resources are limited, decisions have to be made about how to allocate time, money, and energy.

Branches of Economics

1. Microeconomics:

   • Focuses on individual choices and interactions in small markets.
   • Key Topics:
     • Choices of individuals and firms.
     • Market analysis (e.g., gasoline market, textbook prices, professional athletes).
   • Studies the impact of individual choices on product markets.

2. Macroeconomics:

   • Looks at the economy as a whole; aggregate outcomes of microeconomic choices.
   • Key Topics:
     • Gross Domestic Product (GDP): Value of all goods and services produced in a country annually.
     • Unemployment: Percentage of people actively looking for jobs without employment.
     • Inflation: Overall rise in average prices; understanding the causes and consequences.
   • Focuses on national economic health and policies.

Making Economic Choices

• Rational Maximizer Concept:
  • Individuals and businesses should weigh costs and benefits before making decisions.
• Decision Making Process:
  • If costs > benefits, do not proceed.
  • If benefits > costs, proceed.
• Maximization:
  • Individuals aim to maximize happiness based on personal definitions of happiness.
  • Businesses typically aim to maximize profit, although this can vary.

Conclusion

• Overview of what economics is and is not.
• Future topics will delve deeper into microeconomic and macroeconomic fields.
• Encouragement for students in their economic studies.