Introduction to Microeconomics

Introduction to Economics

Understand how scarcity, models, and assumptions form the basis of economics, helping explain choices and behaviors in a resource-limited world.

Topics Covered & Explanations:

• Defining Scarcity
  Scarcity is the fundamental economic problem of having limited resources to meet unlimited wants. This concept underpins the need for choices and prioritization in resource allocation, affecting individuals, businesses, and governments alike. In this module, you’ll explore how scarcity drives economic decisions and why it's central to economic theory.
  
  
• The Trade-Off Between Efficiency and Equity
  This subtopic highlights the tension between maximizing total output (efficiency) and distributing resources fairly (equity). You'll learn how societies and policymakers balance these two objectives, and why improving one may compromise the other—an essential consideration in economic policy formulation.
  
  
• Introduction to Economic Models
  Economic models simplify reality to help analyze economic problems and predict outcomes. You'll understand how visual models like graphs and mathematical expressions are used to illustrate relationships between variables such as price and quantity, allowing clearer policy insights and market analysis.
  
  
• Overview of Economic Assumptions
  Assumptions in economics are simplifications that allow economists to construct models. You’ll learn why assumptions like “perfect rationality” or “ceteris paribus” are necessary to study cause-effect relationships without real-world complexity clouding the analysis.
  
  
• Types of Assumptions
  Explore different types of assumptions—behavioral, structural, and operational—used in economic modeling. This subtopic explains how each type shapes the model’s outcomes and usefulness, and the limitations they introduce in accurately representing real-world scenarios.