Economics

Decisions, Decisions…

Types of Economics

Microeconomics Microeconomics (micro = “small”)Studies the behavior of individual people and firms.

Macroeconomics Macroeconomics (macro = “large”)Studies the behavior of entire economies as a whole.

What is Microeconomics?

Microeconomics is the study of the economic behavior and decision making of small units, such as individuals, families and businesses.

What does that mean?What does that mean?

Less Formally...

There is not enough of everything that people want (and need) to go around.

Some people will get things and others will not. That is a fact.

How do we determine who gets How do we determine who gets what?what?

Decisions: Where to Start? Knowing your Values!! Values: The standards by which

you live; principles. Values = Judgments

Right vs. Wrong Good vs. Bad Important vs. Unimportant

Decisions (Continued)

Personal ValuesPersonal Values Life Values: Most important to

you in life Work Values: Most important to

you in your work

Social ValuesSocial Values Values held by a great number of

people in a society

Decisions (Continued)

Goals: What you want to accomplish in your

life Needs/wants, hopes/dreams

Needs: Things you can’t live without

Wants: Things you would like to have but can

live without

Trade-off

Trade-Off is an alternative we sacrifice when we make a decision.

Opportunity Cost is the next alternative forgone when using a resource.

Your opportunity cost of watching TV might be studying, talking on the phone or maybe even sleeping. But not all 3 -- only the one you value next best.

Tonight’s Assignment Write at least two paragraphs

about one of your own goals. Assignment should include:

Explanation of your goal Some of your personal values Why is this goal important? What would be your opportunity cost?

Due TomorrowDue Tomorrow