Course IntroductionThis course will provide you with a basic understanding of the principles of microeconomics. At its core, the study of economics deals with the choices and decisions we make to manage the scarce resources available to us. Microeconomics is the branch of economics that pertains to decisions made at the individual level, such as the choices individual consumers and companies make after evaluating resources, costs, and tradeoffs.
When we talk about the economy, we refer to the marketplace or economic system where our choices interact with one another. In this course, we discuss how and why we make economic decisions, and how our choices affect the economy. Think about each of the following units as a building block, where the concepts you learn will enable you to understand the material you discover in the next unit. By the end of this course, you will have a strong grasp on the major issues microeconomists face, including consumer and producer behavior, the nature of supply and demand, the different kinds of markets and how they function, and the welfare outcomes of consumers and producers. We also explore how these formal principles and concepts apply to real-world issues. The scope and emphasis of this course go beyond a general understanding of microeconomics to incorporate the core concepts of the overall field of economics.
First, read the course syllabus. Then, enroll in the course by clicking 'Enroll me in this course'. Click Unit 1 to read its introduction and learning outcomes. 2se driver download. You will then see the learning materials and instructions on how to use them.
Unit 1: Introduction to Economics
Before we dive into the principles of microeconomics, we need to define some of the major ideas that lie at the heart of economics. What is the economic way of thinking? What do economists mean when they discuss market structure and the invisible hand? In this unit we identify and define these terms before addressing the driving principles behind microeconomics: the idea that individuals and firms (economic agents) make rational choices based on self-interest. These decisions are necessary, because resources are scarce. In other words, no good or item is infinitely available. We will also introduce a number of economic models, the assumptions and constraints associated with each, and the ways they help us better understand real-life situations.
Completing this unit should take you approximately 9 hours.
Unit 2: Supply and Demand
In this unit we introduce the ceteris paribus assumption, which is crucial to building correlations among economic variables. When using ceteris paribus, we assume that all variables – with the exception of those in explicit consideration – will remain constant. We then examine the supply and demand models and the resulting market equilibrium that occurs where the supply curve and the demand curve intersect. We also explore what causes movements along the curve and the set of factors that cause the curves to shift, affecting both price and quantity, before discussing the meaning and significance of elasticity.
Next, we explore what happens when a market fails to produce a reasonable equilibrium. This situation typically occurs when either the market is not competitive or complete, or its participants are ill-informed. We evaluate various ways the government can address these failures and begin to understand the intricate relationship between government and economics.
Completing this unit should take you approximately 18 hours.
Unit 3: Markets and Individual Maximizing Behavior
In this unit we examine how markets increase overall welfare via the concepts of consumer and producer surplus. We explore how the concepts of marginal costs and benefits affect a company's decision to make one more, or one less, product.
We have already learned that, at its most fundamental level, microeconomics is the study of how we make decisions. To expand on this point, we need to distinguish between the either/or and how much decision. This concept is useful when you look more closely at why firms produce certain levels of output, taking opportunity cost and sunk (fixed) cost into consideration.
This unit concludes with the causes and ramifications of income inequality. While there is much debate about how to address long-term inequality, economists can objectively measure the problem's scope and offer options to manage this economic phenomenon. Protracted poverty and inequality can cause long-term harm to an economy's development.
Completing this unit should take you approximately 10 hours.
Unit 4: The Consumer
In this unit we focus on the individual consumer and the characteristics that compel them (to choose) to spend income on goods and services. The consumer experiences utility – a measure of satisfaction – with every purchase they make, and economists measure this utility to determine a consumer's optimal rate of consumption. The theory of demand is derived from the theory of consumer behavior presented in this unit. We can explain an individual's demand function by two approaches that help illustrate personal preferences: utility analysis and indifference analysis. We explore these concepts more fully in this unit.
Completing this unit should take you approximately 12 hours.
Unit 5: The Producer
In this unit we learn about one of the most important economic agents: the producer. The producer (a company or firm) is responsible for creating the production function (output) and is subject to various cost measures and the results of diminishing returns. We explore these ideas more fully as we delve into the relationship between quantity of input and quantity of output. We will discuss how and why a firm's costs may differ in the short run versus the long run.
Completing this unit should take you approximately 8 hours.
Unit 6: Market Structure: Competitive and Non-Competitive Markets
This unit introduces the concept of perfect competition, an ideal model that serves as a benchmark economists use to analyze real-world market structures. The model of perfect (or pure) competition creates an efficient allocation of resources. However, unregulated markets (which are central to perfect competition) often fail to create desired outcomes in the real world. Economists refer to these situations as examples of imperfect competition.
Here we study the model of perfect competition and move on to what many consider the antithesis of perfect competition, the monopoly model. We will explore imperfect competition and two models that fall under it: monopolistic competition and oligopoly. We also touch on game theory, when we discuss the prisoner's dilemma model and the Nash equilibrium.
Completing this unit should take you approximately 23 hours.
Unit 7: Resource Markets
In this unit we explore how firms decide how much to use their resources (land, labor, capital, and entrepreneurial ability), which are required to produce a final good, and at what price. We derive the demand for resources from the demand for the final goods used to produce them. For example, if consumer demand for cars increases (the final good), the demand for steel (and every other resource car manufacturers use to build the car) also increases.
Completing this unit should take you approximately 3 hours.
This study guide will help you get ready for the final exam. It discusses the key topics in each unit, walks through the learning outcomes, and lists important vocabulary. It is not meant to replace the course materials!
Course Feedback Survey
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Certificate Final Exam
Take this exam if you want to earn a free Course Completion Certificate.
To receive a free Course Completion Certificate, you will need to earn a grade of 70% or higher on this final exam. Your grade for the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again as many times as you want, with a 7-day waiting period between each attempt.
Once you pass this final exam, you will be awarded a free Course Completion Certificate.
The Magic of the Economy
The study of economics makes individuals cognizant of their environment and better decision makers.
Learn faster with Brainscape on your web, iPhone, or Android device. Study Justin Lee's Economics flashcards now! COLLEGE OF ARTS AND SCIENCES MAJOR IN INTERNATIONAL RELATIONS AND ECONOMICS IR-Eco Major (60-61 credits). This major combines international economics, which is the study of markets and economic policy, with international political economy, which studies international institutions and the interactions of states with those institutions and each other motivated by trade-offs among economic goals.
Explain how the study of economics provides knowledge to understand the system and policies that guide life.
- Economics also allows individual agents to balance expectations.
- Economics provides distilled frameworks to analyze complex societal interactions, as in the case of consumer and firm behavior.
- Being knowledgable about economics foundations allows an individual to be an active and aware participant rather than a passive economic agent.
- externality: An impact, positive or negative, on any party not involved in a given economic transaction or act.
- circular flow: A model of market economy that shows the flow of dollars between households and firms.
Economics is a social science. This means that economics has two important attributes. Economics studies human activities and constructions in environments with scarce resources, and uses the scientific method and empirical evidence to build its base of knowledge.
The evaluation of human interactions as it relates to preferences, decision making, and constraints is a significant foundation of economic theory. The complexity of the dynamics of human motivation and systems has led to the establishment of assumptions that form the basis of the theory of consumer and firm behavior, both of which are used to model circular flow interactions within the economy.
Circular Flow of the Economy: Economics provides an accessible foundation for understanding the complexity of the interactions in the world. For example, the circular flow diagram displays the economic framework related to the dynamic interconnectedness of economic agents. In the graph above the display is limited to households and firms but other depictions of circular flow incorporate the government and international trading partners.
Economics provides distilled frameworks to analyze complex societal interactions, as in the case of consumer and firm behavior. An understanding of how wages and consumption flow between consumers and producers provides agents with an ability to understand the symbiosis of the relationship rather than fixating on the contentious components that surface from time to time.
Economics also allows individual agents to balance expectations. An understanding of the ebb and flow of the economy through the boom and bust of the business cycles, creates the potential for emotional balance by reminding agents to limit desperation in downturns and exuberance in expansions.
By developing an understanding of the foundations of economics, individuals can become better decision makers with respect to their own lives and maintain a balance with respect to an externality that has the potential to supplement or deter their plans. Since economic theories are a basis of decision making and regulatory policy, being knowledgable about economics foundations allows an individual to be an active and aware participant rather than a passive economic agent.
Is Economics a Science?
Economics is a social science that has diverse applications.
Explain how economic theory and analysis can be applied throughout society
- Economics incorporates both qualitative and quantitative assessment.
- Economics is divided into two broad areas: microeconomics and macroeconomics.
- Economics can be applied throughout society from business to individual behavior with further application in the study of crime, family and other social institutions and interactions.
- social science: A branch of science that studies the society and human behavior in it, including anthropology, communication studies, criminology, economics, geography, history, political science, psychology, social studies, and sociology.
Economics 101jason Leeds
Economics is a social science that assesses the relationship between the consumption and production of goods and services in an environment of finite resources. A focus of the subject is how economic agents behave or interact both individually (microeconomics) and in aggregate (macroeconomics).
Microeconomics examines the behavior individual consumers and firms within the market, including assessment of the role of preferences and constraints. Macroeconomics analyzes the entire economy and the issues affecting it. Primary focus areas are unemployment, inflation, economic growth, and monetary and fiscal policy.
The discipline of economics evolved in the mid-19th century through the combination of political economy, social science and philosophy and gained entrenchment with the increased scrutiny of the asymmetric financial and welfare distribution attributed to sovereign rule. Early writings are attributable to Jeremy Bentham, David Ricardo, John Stuart Mill and his son John Mill and are focused on human welfare and benefits rather than capitalism and free markets.
Founders of Economics: John Stuart Mill, along with David Ricardo, Jeremy Bentham and other political and social philosophers of the mid-nineteenth century are credited with the founding of the social-political theory that has evolved to be the discipline of economics.
As in other social sciences, economics does incorporate mathematics in the theoretical and analytics framework of the discipline. Formal economic modeling began in the 19th century with the use of differential calculus to represent and explain economic behavior, such as utility maximization, an early economic application of mathematical optimization in microeconomics. Economics utilizes mathematics to assess the relationships between economic actors in environments in which resources are finite.
Economics 101 Jason Lee Actor
The use of mathematics in economics increased the quantitative analysis inherent in the discipline; however, given the discipline’s essentially social science roots, many economists from John Maynard Keynes to Robert Heilbroner and others criticized the broad use of mathematical models for human behavior, arguing that some human choices can not be modeled or evaluated in a mathematical equation.
Economics 101 Jason Lee Soffer
Economic theory and analysis may be applied throughout society, including business, finance, health care, and government. The underlying components of economic theory can also be applied to variety of other subjects, such as crime, education, the family, law, politics, religion, social institutions, war, and science.