Book contents
- Frontmatter
- Contents
- Preface
- PART ONE INTRODUCTION
- 1 The Nature and Scope of Economics
- 2 Working Tools
- PART TWO PREFERENCE, CONSUMPTION, AND DEMAND
- PART THREE THE FIRM AND THE INDUSTRY
- PART FOUR FACTOR MARKETS AND INCOME DISTRIBUTION
- PART FIVE EXCHANGE
- PART SIX ECONOMICS AND TIME
- PART SEVEN POLITICAL ECONOMY
- Answers to Selected Questions
- Name Index
- Subject Index
1 - The Nature and Scope of Economics
from PART ONE - INTRODUCTION
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Preface
- PART ONE INTRODUCTION
- 1 The Nature and Scope of Economics
- 2 Working Tools
- PART TWO PREFERENCE, CONSUMPTION, AND DEMAND
- PART THREE THE FIRM AND THE INDUSTRY
- PART FOUR FACTOR MARKETS AND INCOME DISTRIBUTION
- PART FIVE EXCHANGE
- PART SIX ECONOMICS AND TIME
- PART SEVEN POLITICAL ECONOMY
- Answers to Selected Questions
- Name Index
- Subject Index
Summary
Economics concerns decisions – choices among actions. Every action has its pros and cons, pluses and minuses, benefits and costs. Are you thinking about taking up tennis? The game may trim your figure and improve your disposition, but will take time from your studies and could damage your joints. How about dropping out of college to take a job? You would likely earn more money now, but earn less later in life. Similarly in business and government. Whether it's a small action, as when your neighborhood market sets its price for potatoes, or a big one, as when Congress decides on declaring war, almost always there are valid arguments for and against. Faced with such opposed considerations, how should individuals, firms, or governments make decisions? Economics shows how to determine the best action, through a systematic assessment of the costs and benefits.
Few decisions are made in a vacuum. Other people are likely to react. Thinking like an economist means taking these reactions into account. A law firm that raises its billing rates may find customers switching to another provider of legal services – so the higher price might not increase profit after all. Or imagine that Congress, aiming to widen use of the Internet, were to require Internet service providers (ISPs) to charge very low prices. Before concluding that this is a good idea we would need to know how the ISPs would react. They might provide access at those low prices.
- Type
- Chapter
- Information
- Price Theory and ApplicationsDecisions, Markets, and Information, pp. 3 - 26Publisher: Cambridge University PressPrint publication year: 2005