lecture 1 - defining economics

Question 1

where does the word economics come from? what does it mean?

Answer 1

the greek work oikonomics
it means the one who manages a household. it’s the sum total of the managerial decisions.

Question 2

what is the modern definition of economics?

Answer 2

decision makers, economic actors/agents in society. these are things like individuals, workers, government etc.

Question 3

what are the different schools of thought?

Answer 3

neoclassical economics
keynesian economics
behavioural economics
heterodox economics (political, feminism, marxist economics)

Question 4

why must we make decisions?

Answer 4

because resources are finite If they were infinite we could produce forever and do everything.

Question 5

what are the two alternative definitions of economics

Answer 5

Economics is the study of how the society (or different economical actors) manage their scarce resources.
Economics is a social science that studies the choices that individuals, organisations, governments and the entire society makes as they cope with scarcity and the incentives that influence and reconcile those choices.

Question 6

definition of micro economics

Answer 6

individual decision making (this course)
Why are we affected by ads?
What is the cheapest way to produce?
Why do people work?
etc..

Question 7

definition of macroeconomics

Answer 7

The study of large group decision makers.

Question 8

definition of macroeconomics

Answer 8

The study of large group decision makers.

Question 9

what are the nine areas of Neoclassical economics that are divided into three groups:

Answer 9

Economic actors making decisions-
People face trade-offs
The cost of something is what you give up to get it (opportunity cost)
Rational people think at the margin, meaning a rational thought strives for maximum utility and this is what we assume people do.
People respond to incentives.

How people interact-
Trade can make everyone better off.
Markets can be a good way to organise economic activity.
Governments can sometimes improve market outcomes.

How the economy as a whole works-
An economy’s standard of living depends on its ability to produce goods and services.
Prices rise when the government prints too much money.

Question 10

what are the four c’s

Answer 10

Context
History and institutions shape and constrain behaviour
Collective behaviour
Actions resulting from group influence or membership
Conflicting interests
Group goals, meaning that one group gains at the expense of another (i.e. actions are a zero sum game).
Change
Instability created by condlift interests