Chapter 1 : Introduction to Economics
Topics covered in this snack-sized chapter:
- We all want progress, and we all want to reduce hunger, poverty and inequality.
- But our resources are finite.
- Therefore, we can’t afford
to run our societies in wasteful and inefficient ways.
That’s where good economic policies have a crucial role to play.
It is the economist’s job to list the options available and to predict the likely costs and benefits of each option.
An economist is a professional in the social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy.
Sub-fields for an Economist:
- Microeconomic analysis or financial statement analysis
Analytical methods and tools for an Economist:
- Economics computational models
Economists provide specialist advice based on the application of economic theory and knowledge.
They do this by studying data and statistics and using their understanding of economic relationships to uncover trends, carrying out considerable amounts of research and collecting large amounts of information.
They then analyze all the data they have amassed to assess feasibility, produce forecasts of economic trends, determine the implications of their findings and make recommendations of ways to improve efficiency.
Economists use specialist software and advanced methods in statistical analysis to assemble, sift and present this information, which is then used to advise businesses and other organizations, including government agencies.
Macroeconomics: Macroeconomics deals with issues related to data that summarizes the economy of an entire nation.
Microeconomics: Microeconomics deals with questions related to economic variables that describe a sub-national entity, typically individual economic agents, such as households and firms.
Equilibrium: When supply and demand are equal the economy is said to be at equilibrium.
Elasticity: The degree to which a demand or supply curve reacts to a change in price is the curve's elasticity.
Utility: In economics, “Utility” is a measure of relative satisfaction. It represents the advantage or fulfillment that a person receives from consuming a good or service.
Marginal Utility: Additional satisfaction, or amount of utility, gained from each extra unit of consumption.
Monopoly: Monopoly is a market structure in which there is only one producer/seller for a product.
Oligopoly: An oligopoly is a market form in which a market or industry is dominated by a small number of sellers.
Perfect Competition: Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes.
Law of Demand: The higher the price, the lower the quantity demanded.
Law of Supply: The supply increases as prices increase and decreases as prices decrease.