MICROECONOMICS

MICROECONOMICS

Chapter 1: Introduction to Economics

1-1.     What Is Economics?: The word "economics" is from the Greekwords [oikos], meaning "family, household, estate," and [nomos], meaning "custom, law," and hence means "household management" or "management of the state".

1-2.    Economist is a person who uses economic concepts and data in the way of employment, or someone who has got a university degreein the subject.

1-3.     There are many definitions of economics as follow:

·      Economics is asocial science seeking to analyze and describe the production, distribution, and consumption of goods and services.

·      The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems.

·      The study of man in the ordinary business of life.

·      Is the science that study the wealth of nation.

1-4.Branches of Economics: Economics is subdivided into two main branches:

• Microeconomics: is a branch of economics that studies the economic behavior of individual units such as businesses and households in face of scarcity and government relations.
• Macroeconomics: is a branch of economics that studies an economy as a whole with a picture to understanding the relations between economic aggregates such as national income, employment and inflation. 

1-5.Scarcity: exists in every society because   human material wants are unlimited, whereas the economic resources necessary to produce the goods and services to satisfy these wants are limited. 

      Scarcity is a fundamental problem for every society. Decision must be made regarding whatto produce, how to produce, and for whom to produce.

1-6. Positive economics:

           Positive economics is the branch of economicsthat concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect relationships and includes the developing and testing ofeconomic theories.

1-7. Normative economics:

             Normative economics is the branch of economicsthat merges value rules about what the economy should be like, or what particular policyactions should be recommended to achieve a desirable goal.

1-8. The Methodology of economics:

     Because economic phenomena are complex, economics has found it useful to model economic behavior. In constructing a model, economists make assumption which cut away unnecessary detail and reduce the complexity of economic behavior. Once modeled, economic behavior may be presented as a relationship between a dependent variable and few independent variables. The  behavior being explained is the  dependent variable, normally, the dependent variable is presented as depending upon one independent variable, with the effect of the  other independent variable held constant. Thus, ydepends upon x.