Management
INTRODUCTION
PART
CHAPTER
Getting Started
CHAPTER
1
1
CHECKLIST
When you have completed your study of this chapter, you will be able to
1
Define economics, distinguish between microeconomics and macroeconomics, and explain the questions of microeconomics.
2
Describe the work of economists as social scientists.
3
Explain five core ideas that define the economic way of thinking.
4
Explain why economics is worth studying.
You are studying microeconomics at a time of enormous change. After a decade of technological change that brought e-commerce, MP3 music, DVD movies, cell phones, Palm Pilots, and a host of other gadgets and toys that have transformed the way we work and play, our lives were changed by the terrorist attacks of
September 11, 2001.The shock waves from that day will pulsate through our economy for many years.They have shrunk our airlines, expanded our security and defense industries, and created huge uncertainty about the future.
Outside the United States, more than 1 billion of the world’s 6.3 billion people survive on $1 a day or less.
Disturbed by the combination of increasing wealth and persistent poverty, some people are pointing to globalization as the source of growing economic inequality.
Your course in microeconomics will help you to understand the powerful forces that are shaping our economic world and help you to navigate it in your everyday life and work.
1
2
Part 1 • INTRODUCTION
1 .1 DEFINITIONS AND QUESTIONS
Scarcity
The condition that arises because the available resources are insufficient to satisfy wants.
Incentive
A reward or a penalty—a “carrot” or a “stick”—that encourages or discourages an action.
All economic questions and problems arise because human wants exceed the resources available to satisfy them. We want good health and long lives. We want spacious and comfortable homes. We want a huge range of sports and recreational equipment from
PART
CHAPTER
Getting Started
CHAPTER
1
1
CHECKLIST
When you have completed your study of this chapter, you will be able to
1
Define economics, distinguish between microeconomics and macroeconomics, and explain the questions of microeconomics.
2
Describe the work of economists as social scientists.
3
Explain five core ideas that define the economic way of thinking.
4
Explain why economics is worth studying.
You are studying microeconomics at a time of enormous change. After a decade of technological change that brought e-commerce, MP3 music, DVD movies, cell phones, Palm Pilots, and a host of other gadgets and toys that have transformed the way we work and play, our lives were changed by the terrorist attacks of
September 11, 2001.The shock waves from that day will pulsate through our economy for many years.They have shrunk our airlines, expanded our security and defense industries, and created huge uncertainty about the future.
Outside the United States, more than 1 billion of the world’s 6.3 billion people survive on $1 a day or less.
Disturbed by the combination of increasing wealth and persistent poverty, some people are pointing to globalization as the source of growing economic inequality.
Your course in microeconomics will help you to understand the powerful forces that are shaping our economic world and help you to navigate it in your everyday life and work.
1
2
Part 1 • INTRODUCTION
1 .1 DEFINITIONS AND QUESTIONS
Scarcity
The condition that arises because the available resources are insufficient to satisfy wants.
Incentive
A reward or a penalty—a “carrot” or a “stick”—that encourages or discourages an action.
All economic questions and problems arise because human wants exceed the resources available to satisfy them. We want good health and long lives. We want spacious and comfortable homes. We want a huge range of sports and recreational equipment from