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ECO 101: INTRODUCTION TO MICROECONOMICS

Introduction

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OVERVIEW

What is economics? 3 components of economic theory 2 types of economic theory

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WHAT IS ECONOMICS?

Economics is the study of how people choose to use scarce/limited resources to improve their well-being, by essentially trying to satisfy unlimited wants.

There are 3 components to basic economics theory:

While resources are scarce/limited, wants are unlimited.

Resources Choices Outcome

Land, capital (buildings, machinery etc.), time, knowledge etc.

How to combine resources to produce goods and services?

Do the resources and the choices made to use the resources increase people’s well-being?

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TYPES OF ECONOMIC THEORY

2 main branches of economics: Microeconomics: focuses on the actions of

individuals and industries, e.g. interaction between buyer and seller, borrower and lender. (micro means small).

Macroeconomics: takes a much broader view by analyzing the economic activity of an entire country or the international market place (macro means large).