Economics Text Book Chapter Summaries

Topics: Supply and demand, Economics / Pages: 86 (21491 words) / Published: Aug 24th, 2011
The following chapter summaries are mostly based on the McConnell & Brue text “Economics- 16th Ed.”
Details available at note .. arrow means “leads to,” “results in,” “causes”

Chapter 1 – The Nature and Method of Economics

Economics is the study of scarcity and choice

Key concept- opportunity cost: for a person to get more of one thing... he/she must forego getting something else

e.g. to get food must pay (give up) money
In economics rational behavior is assumed, e.g. people want more goods for less money
Assumption: we all want to increase utility = happiness, satisfaction
Rational self-interest not same as selfishness, e.g. one reason for donating to charity is because of derived satisfaction Key concept- marginal analysis- comparisons of marginal benefits and marginal costs, e.g.: keep eating until full, that is... until marginal benefit = marginal cost...

i.e. not worth it to pay for more food when already full
Why study economics?
As John Maynard Keynes said “indeed, the world is ruled by little else.”
Most practical ideology is found in economics
Economics for citizenship- intelligent participation in a democracy requires a knowledge of fundamental economics However, from the 2004 “A Fifty College Study” by the American Council of Trustees and Alumni: “One of this study’s most extraordinary findings was that not one college or university among those studied requires a general course in economics” Understanding of concept of marginal benefits / marginal costs are required for business management
Ultimately economics is a social science seeking society’s overall fullest advantages and best interests

Article 1.1 – “The Opportunity Cost of Economics Education” – see end of this chapter

Figure 1.1 – Economic Methodology

Figure 1.1 -

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