Introduction to Economics

Purpose of the Lecture

• Introduction to the study of economics
• Importance of economics for business and general education
• Understanding how economists interact with the world
• Going beyond basic supply and demand concepts

Definition of Economics

• Economics is the science of scarcity
  • Unlimited wants and needs vs. limited resources
  • Necessity to make choices due to unmet needs and wants
• Study of decision-making in the face of scarcity

Key Areas of Economics

• Microeconomics
  • Focus on individual, business, and industry decision-making
  • Government's role in these decisions
• Macroeconomics
  • Focus on GDP, inflation, unemployment, and economic growth
  • Emerged post-Great Depression with John Maynard Keynes

Three Economic Questions

• What is going to be produced?
• How is it going to be produced?
• Who is it going to be produced for?

Economic Systems

• Market Economies
  • Decisions driven by consumer demand and profit motives
• Government/Centrally Planned Economies
  • Government decides production, methods, and allocation
• Mixed Economies
  • Combination of market and government influences
  • Example: United States

Economic Theories

• Adam Smith's Theory
  • Individuals acting in self-interest benefit society
• John Nash's Game Theory
  • Altered perspective; considers strategic interaction in decision-making

Examples and Applications

• Globalization
  • Specialization benefits global markets
• Information Revolution
  • Technological advances improved global connectedness
• Climate Change and Government Debt
  • Challenges with individual self-interest vs. societal good

Economic Concepts

• Trade-offs and Opportunity Cost
  • Every choice involves a trade-off
  • Opportunity cost is the highest valued alternative given up
• Rational Choices and Marginal Analysis
  • Decisions made by comparing marginal benefits and costs
  • Actions taken if marginal benefit exceeds marginal cost

Incentives

• Encouragements to influence decision-making
• Positive and negative incentives

Economics as a Social Science

• Utilizes the scientific method
  • Model building and testing
  • Predictive accuracy and data alignment

Positive vs. Normative Economics

• Positive Statements
  • Factual, true or false
• Normative Statements
  • Opinion-based, what ought to be

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These notes provide a structured summary of the introductory lecture on economics, covering the key concepts, theories, and practical applications discussed by the lecturer.