Thinking Like

An Economist

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Economics: Studying
Choice In a World of Scarcity

 The Scarcity Principle

 Boundless wants cannot be satisfied with
limited resources.
 Therefore, having more of one thing
usually means having less of another.
 Because of scarcity we must make
choices.

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 MB MC
Economics: Studying
Choice In a World of Scarcity

Wants vs. Resources

Scarcity

Choices

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 MB MC
Economics: Studying
Choice In a World of Scarcity

 Economics
 The study of how people make choices
under conditions of scarcity.

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 MB MC

Economics: Micro and Macro

 Microeconomics
 The study of individual firms and
households

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 MB MC

Economics: Micro and Macro

 Macroeconomics
 The study of the performance of national
economies, and of the policies that
governments use to try to improve that
performance

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Normative Economics
vs. Positive Economics

 Positive Economic Principle

 One that says ‘what is’
 Normative Economic Principle
 One that ‘what should be’

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 MB MC

The Approach of This Course

 Focus on core economic concepts

 Learning economics through
applications

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Economic Naturalism

 Using insights from economics to help

make sense of observations from
everyday life

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