What is Economics? Introductory lesson

ECONOMICS A practical science dealing with the production, distribution, and use of goods, services, resources and wealth.

Microeconomics The Economist's Dictionary of Economics defines Microeconomics as "The study of economics at the level of individual consumers, groups of consumers, or firms... The general concern of microeconomics is the efficient allocation of scarce resources between alternative uses but more specifically it involves the determination of price through the optimizing behavior of economic agents, with consumers maximizing utility and firms maximizing profit." “Happiness” – Utility can be defined in many different ways, happiness is just one and one in which I will use to explain it in this course.

Macroeconomics The Economist's Dictionary of Economics defines Macroeconomics as "The study of whole economic systems aggregating over the functioning of individual economic units. It is primarily concerned with variables which follow systematic and predictable paths of behavior and can be analyzed independently of the decisions of the many agents who determine their level. More specifically, it is a study of national economies and the determination of national income."

Economics Terms Now…in your groups write what you believe the following terms mean Need Want Product Resource Scarcity Value Agents

Assignment In your groups, what are your needs and wants? Make a T-Chart of needs and wants. How many of them are economic or are influenced by the economy? We will go over my list and see what you have!

T-Chart Needs Wants -----------------------------------------------------------Food - Love/Sex Water - Money Shelter - Monetary Goods Social Interaction - Services Which are influenced by the economy?

Answer All of them!

Scarcity Our needs and wants are virtually unlimited (you probably want something right at this moment!) but our means to satisfy these needs and wants are limited. Economics seeks to allocate resources so to satisfy these needs and wants. Our resources that we use to satisfy these needs and wants usually involve income and savings.

Our Economic Dilemma How do we allocate our scarce resources best so to maximize our utility, but at the same time to use all of our available resources. Remember, we do not want to run out of resources! In your groups, why do producers or consumers not want to run out of resources?

So Then, What is Economics? Economics is the study of the way we make decisions about the use of scarce resources. Or nicely as “the science of scarcity and choice”. - Robbins book 'Nature and Significance of Economic Science' (1932)

Xenophon Xenophon was born a free citizen-soldier of Athens (Greece!) around 430 BCE (Before the Common Era). He studied under Socrates and was expelled from Athens in 395 BCE. While in exile he philosophized about estate management and the division of labor between men and women as well as personal wealth with in his work Oeconomics. Read the selection you have been given and answer the questions.