Intro to Economics and Circular Flow Diagram (ECO 2105)

Logistics and Week 1 Overview

• This week’s activities and course logistics from the transcript:

  • Read the course syllabus and the course introduction that was completed on Tuesday.

  • Complete the mandatory syllabus quiz by ext{August }17, ext{ 11 PM ET}; students who do not complete it will be marked as inactive and may be dropped.

  • Homework #1 will cover Chapter 1 and can be completed after today’s lecture in DGAll (the platform referenced).

  • Self-introductions are voluntary.

  • Attendance: before leaving class, put your name on the attendance sheet; attendance grades are dynamic and will be updated after each class, starting at 2 points after today and increasing over the semester. The final grade is not finalized until the end of the semester.

• Week 1 focus: getting started with Chapter 1, “Welcome to Economics.”

• Quick classroom expectations: if you have questions, raise a hand; otherwise, office hours or email for follow-up.

What is Economics? Core question and definitions

• Economics is about decision making under scarcity; it studies how humans or human society make decisions given limited resources.

• Two broad framings of economics:

  • The balance between human wants and what we can afford, given fixed resources.

  • Economics as the study of how to allocate scarce resources to satisfy often infinite wants.

• Economics as a social science that uses scientific methods to study optimal choices under scarcity.

• Important reframes:

  • Economics can be viewed as balancing two facts: what we want (infinite) vs. what we can afford (finite).

  • The field asks how to maximize happiness or utility given a budget or resource constraint.

• Everyday relevance example introduced in class:

  • You have 200 in pocket and want to buy the best Xbox you enjoy the most; scarcity (limited ) requires you to optimize satisfaction under a budget.

• Key takeaways about the discipline:

  • Economics investigates the balance between infinite wants and finite resources.

  • It uses a scientific approach and models to derive insights about behavior and allocations.

  • It introduces concepts such as scarcity, wants, rationality, and optimization.

The Economic Person: Rationality, Scarcity, and Perspectives

• The economic “person” is assumed to be rational: decisions are purposeful

Logistics and Week 1 Overview

• This week’s activities and course logistics from the transcript:

  • Read the course syllabus and the course introduction that was completed on Tuesday.

  • Complete the mandatory syllabus quiz by \text{August } 17, \text{ 11 PM ET} ; students who do not complete it will be marked as inactive and may be dropped.

  • Homework #1 will cover Chapter 1 and can be completed after today’s lecture in DGAll (the platform referenced).

  • Self-introductions are voluntary.

  • Attendance: before leaving class, put your name on the attendance sheet; attendance grades are dynamic and will be updated after each class, starting at 2 points after today and increasing over the semester. The final grade is not finalized until the end of the semester.

• Week 1 focus: getting started with Chapter 1, “Welcome to Economics.”

• Quick classroom expectations: if you have questions, raise a hand; otherwise, office hours or email for follow-up.

What is Economics? Core question and definitions

• Economics is about decision making under scarcity; it studies how humans or human society make decisions given limited resources.

• Two broad framings of economics:

  • The balance between human wants and what we can afford, given fixed resources.

  • Economics as the study of how to allocate scarce resources to satisfy often infinite wants.

  • Economics as a social science that uses scientific methods to study optimal choices under scarcity.

• Important reframes:

  • Economics can be viewed as balancing two facts: what we want (infinite) vs. what we can afford (finite).

  • The field asks how to maximize happiness or utility given a budget or resource constraint.

• Everyday relevance example introduced in class:

  • You have 200 in pocket and want to buy the best Xbox you enjoy the most; scarcity (limited ) requires you to optimize satisfaction under a budget.

• Key takeaways about the discipline:

  • Economics investigates the balance between infinite wants and finite resources.

  • It uses a scientific approach and models to derive insights about behavior and allocations.

  • It introduces concepts such as scarcity, wants, rationality, and optimization.

The Economic Person: Rationality, Scarcity, and Perspectives

• The economic “person” is assumed to be rational: decisions are purposeful, aiming to achieve specific goals, such as maximizing personal satisfaction (utility) or profit.

  • This implies individuals make decisions by thoughtfully weighing the benefits against the costs of their actions.

  • Marginal Thinking: Rational decisions frequently involve evaluating the additional (marginal) benefits and marginal costs of undertaking one more unit of an activity or consuming one more unit of a good.

• Scarcity and Choice: Given that resources are inherently scarce, rational individuals and societies must make choices, which inevitably involve trade-offs.

  • Opportunity Cost: A fundamental concept arising from scarcity, the true cost of any choice is not just its monetary price, but the value of the next best alternative that must be foregone to obtain it.

• Economic Models: Economists often employ simplified models that build upon assumptions of rationality and optimization to predict behavior and analyze outcomes within a framework of limited resources and unlimited wants.