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Chapter 1 I ntroduction to Microeconomics

by: Jennifersmith

Chapter 1 I ntroduction to Microeconomics ECON 103

Marketplace > University of Wisconsin - Eau Claire > Economics > ECON 103 > Chapter 1 I ntroduction to Microeconomics
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About this Document

All you need to study for your Microeconomics Exam Chapter 1,study these notes.
Principles of Microeconmics
Sanjukta Chaudhuri
Class Notes
Econ 103




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This 2 page Class Notes was uploaded by Jennifersmith on Saturday April 16, 2016. The Class Notes belongs to ECON 103 at University of Wisconsin - Eau Claire taught by Sanjukta Chaudhuri in Fall 2016. Since its upload, it has received 4 views. For similar materials see Principles of Microeconmics in Economics at University of Wisconsin - Eau Claire.


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Date Created: 04/16/16
Economics Chapter 1 Welcome to Economics Topics  1. The world of economics 2. What is economic? Why is it important? 3. Division of labor 4. Why study Economics? 5. Microeconomics and Macroeconomics  6. Theorizing in Economics  The world of Economics - Decision making  - Processing information fast and accurate  - Understanding market behavior  What is Economic? Why is it important? - Defining Economics as the study of how human make decision in the face of scarcity - Scarcity - Resource scarcity - Virtually infinite human wants - Food, shelter, clothing, transportation, entertainment is all scarce  - Scarcity is evident in hunger, homelessness, lack of critical healthcare - We cannot have everything we want - How do we solve the problems of scarcity? - Family must decide between a car and a vacation  - Town must choose between police station or a new school - Nations mast chose between war and protecting the environment  - Resources are insufficient to buy everything - So why not just produce everything we need? Division of Labor - Modern economics are characterized by division and specialization of labor - Divide production into several small tasks - Allot workers to perform individual tasks - Modern businesses build on specialization  Restaurants  University   Shoe factory  Hospitals  - Why Specialize?  Focus on comparative advantage  Efficient (quicker production) and higher quality   Economics of scale (increase in production reduces average cost  per unit)  Trade and procure other goods and services Why study Economics? - Virtually every problem has an economic dimension - Global warming, world poverty, armed conflicts  - Understand budget, regulation, law in order to be a good economic citizen - Become a well wounded thinker  - Question the validity of statements (such as made by politicians) Microeconomics and Macroeconomics -  Microeconomics – Focus on the individual agent (consumer choice, profit maximization, labor­leisure choice, human capital decisions) - Macroeconomics – Focus on the economy (growth, inflation, unemployment rate, fiscal  policy, monetary policy) Theorizing in Economics - Theory – Simplified representation of how two or more variables interact with each other - Break­down real world to understand essentials  - Simple enough to understand  - Complex enough to capture essential feature  - Ex: circular flow diagram 


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