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Introduction to Economics Essay

What is economics? Economics is the study of how societies choose to use scarce productive resources that have alternative uses, to produce commodities of various kinds, and to distribute them among different groups. We study economics to understand not only the world we live in but also the many potential worlds that reformers are constantly proposing to us. 2. Goods are scarce because people desire much more than the economy can produce. Economic goods are scarce, not free, and society must choose among the limited goods that can be produced with its available sources. . Microeconomics is concerned with the behavior of individual entities such as markets, firms, and households. Macroeconomics views the performance of the economy as a whole. Through all economics, beware of the fallacy of composition and the post hoc fallacy, and remember to keep other things constant. B. The Three Problems of Economic Organization 4. Every society must answer three fundamental questions: what, how, and for whom? What kinds and quantities are produced among the wide range of all possible goods and services? How are resources used in producing these goods?

And for whom are the goods produced (that is, what is the distribution of income and

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consumption among different individuals and classes)? 5. Societies answer these questions in different ways. The most important forms of economic organization today are command and market. The command economy is directed by centralized government control; a market economy is guided by an informal system of prices and profits in which most decisions are made by private individuals and firms. All societies have different combinations of command and market; all societies are mixed economies. C.

Society’s Technological Possibilities 6. With given resources and technology, the production choices between two goods such as butter and guns can be summarized in the production-possibility frontier (PAP). The PAP shows how the production of one good (such as guns) is traded off against the production of another good (such as butter). In a world of scarcity, choosing one thing means giving up something else. The value of the good or service Oregon is its opportunity cost. 7. Productive efficiency occurs when production of one good cannot be increased without curtailing production of another good.

This is illustrated by the PAP. When an economy is on its PAP, it can produce more of one good only by producing less of another good. 8. Production-possibility frontiers illustrate many basic economic processes: how economic growth pushes out the frontier, how a nation chooses relatively less food and other necessities as it develops, how a country chooses between private goods and public goods, and how societies choose between consumption goods and capital goods that enhance future consumption. 9. Societies are sometimes inside their production-possibility frontier.

When unemployment is high or when revolution or inefficient government regulations hamper economic activity, the economy is inefficient and operates inside its PAP. Introduction to Economics By cookie A normative approach to economics looks at “what ought to be,” as the economist Milton Friedman put it, when it comes to decision-making relating to economics. Rather than Just objectively studying an economic situation and coming up with solutions, normative economics involves coming up with a solution that caters to a certain perspective.

It has a moral or ethical component to it, rather than merely a factual orientation, which introduces a subjective orientation to a study. Positive Approach In contrast, the positive approach to economics is to look at facts objectively and come up with input. In analyzing a situation, positive economics does not involve imposing value Judgments on others. Rather, this approach studies things as they re, rather than as they ought to be. Economists in general favor a positive approach to economics, so as to preserve the integrity of economic analysis and decision- making.

A positive approach gives the field more credibility. What do you think Economics is? The study of money? Wealth? According to the Quality Assurance Agency for Higher Education, Economics is the ‘study of the factors that influence income, wealth and well-being. It is a social science which incorporates math and statistics as well as having connections with the physical sciences (biology, medicine and physics) and many other disciplines (politics, law, geography, psychology etc).

What makes Economics different from other social sciences? An economist’s approach follows these 5 steps: 1 . Abstract and simplify to find the problem 2. Analyses and reason 3. Organism, absorb, build, analyses and evaluate both qualitative and quantitative data 4. Criticism the data by looking at its real-life context 5. And finally create a policy for the problem, releasing the limits as well as its productivity How much math is there? Economics does deal with statistical and mathematical problems.

The role they take within a degree depends on the institution and your choices. It is worth noting that economists do use information which is of varying numerical types (tables, graphs) and skills to handle this information are required not only through math and statistics but also computer software. Economics is not only about math. It is a social science so its application into real life is visible and constant through many streams; politics, education, the environment, health care or simply your living costs.

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