Chapter 1: Economics and Life

the basic insights of economics
-what is economics? (the study of how people, individually and collectively, manage resources)
-Micro vs. Macro economics (micro: how do individuals and firms manage resources / Macro:the economy on a regional, national, or international scale)
-micro and macro economics are highly related and interdependent
-as humans we want things and work to get them.. thats where rational behavior steps in (making choices to achieve goals in the most effective way)
-economist tend to break down problems by asking a set of four questions:
1. What are the wants and constraints of those involved?
2. What are the trade offs?
3. How will others respond?
4. Why isn’t everyone already doing it?

economics
the study of how people, individually and collectively, manage resources

microeconomics
the study of ho individuals and firms manage resources

macroeconomics
the study of the economy on a regional, national, or international scale

rational behavior
making choices to achieve goals in the most effective way possible

Scarcity
-you cant always get what you want
-what is scarcity? (the condition of wanting more than we can get with available resources)
-people want a lot of things but are constrained by limited resources
-scarcity describes the world on a collective level: As a society, we can produce only so many things, and we have to decide how those things are divided among many people

scarcity (def)
the condition of wanting more than we can get with available resources