Lecture #1 - Introduction to Economics

Part 1. Overview
● The Introduction to Economics and Modern Capitalist Economy

● What is Economics?
● What are the defining features of our economy?
● How do economists analyze an economics issue?



Microeconomics (individual behavior, decision-making rule, price systems)

Vs.

Macroeconomics (aggregate economy, growth distribution, crisis, central bank’s monetary
policy)

Defining Economics (Chang, Ch. 1)
● What is economics?
:The subject matter of economics

● Chemistry: the study of chemicals
● Biology: the study of living things

● Economics: the study of the economy
or the study of life and everything (?)

Question:
Is economics (almost) about life, the universe and everything?


Neoclassicals - main body of the schools of economics:
Economics is the study of rational human choice. Economics is the study of the
allocation of scarce resources among unlimited wants

Lionel Robbins (1933)
“Economics is the science which studies human behavior as a relationship between
ends and scarce means which have alternative uses”

George Stigler (1942)
“The study of the principles governing the allocation of scarce resources among
competing ends when the objective is to maximize the attainment of the ends”