What is Economics? And why do I care?

Economics is the study of how we make decisions in a world where resources are limited (we can’t have as much as we want. Sad I know.)

2 Divisions of Econ Economics is divided into 2 parts Microeconomics- deals with behavior and decision making by small units such as individuals and firms. Macroeconomics- deals with the economy as a whole and decision making by large units such as governments.

Scarcity Is the fundamental economic problem facing ALL of us. Scarcity means: people do not and cannot have enough income and time to satisfy every want.

Do not confuse scarcity with shortages. Scarcity ALWAYS exists because of competing alternative uses for resources, whereas shortages are TEMPORARY.

As a result of scarcity, everyone (consumers, businesses, and the government) is forced to make choices. Since we cannot have everything we want, we face trade-offs, or choices.