Chapter One Economics:

Chapter One Economics:

1. 1. Economics is everywhere- study of decisions

2. 2. Econ is a way of thinking not a subject matter & you can learn how to think about problems using these ideas

3. 3. econ is concerned with how people make decisions when faced with scarcity

4. 4. there are 3 fundamental questions and 2 opposing answers

5. 5. micro deals with individual decision makers and macro deal with aggregates

6. 6. economics uses the scientific method using models that simplify the real world

7. 7. people are assumed to be rational (bounded rationality)

8. 8. incentives influence behavior and often generate unintended consequences (indirect effects, creates other incentives you didn't realize)

9. 9. positive vs. normative statements