Class Summary 9/9/11

Micro vs. Macroeconomics


Micro - deals with the individual choices of people.
Macro - concerned with the effects of personal choices on a broader spectrum.


Take, for example, the affects of cheap, unhealthy food on the American population. The monetary cost of the Big Mac itself isn't very high, but the cost it has on the health of the consumer is significant. People are incentivized to eat unhealthily by the low price of fast food. Because more costumers are choosing the drive-thru, especially in tougher economic times, healthcare has adjusted. A few centuries ago, a diagnosis of diabetes would have been a death sentence. With so many people contracting the disease later in life due to their eating habits, healthcare has improved, making diabetes entirely treatable.

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Why should we study economics?

• It provides us with a sense of awe.
• It helps us to understand specific concepts.
• And perhaps most importantly, it helps us to truly understand specific facts.

The reason the advice of economists is worthwhile is because they understand how things are supposed to work. This is important because there's so much order in our lives that anything out of the ordinary is newsworthy. We have become so contented in our modern-day lifestyles that we are completely thrown for a loop when things fall out of whack.

Economists study trade-offs within the context of costs and benefits. Intentions ≠ Results!