Many workers lose their jobs because firms need fewer workers to produce the reduced amount of output. Externalities caused by incomplete or nonexistent property rights: Without full and complete property rights, markets are unable to take all the costs of production into account. Macroeconomics studies national economies, concentrating on economic growth and how to prevent and ameliorate recessions. Governments fight recessions and encourage growth using monetary policy and fiscal policy.

remember This icon alerts you that I’m explaining a fundamental economic concept or fact that you would do well to stash away in your memory for later. It saves you the time and effort of marking the book with a highlighter. Economics is all about humanity’s struggle to achieve happiness in a world full of constraints. There’s never enough time or money to do everything people want, and things like curing cancer are still impossible because the necessary technologies haven’t been developed yet. But people are clever. They tinker and invent, ponder and innovate. They look at what they have and what they can do with it and take steps to make sure that if they can’t have everything, they’ll at least have as much as possible. An industry consists of all firms making similar or identical products. An industry’s market structure depends on the number of firms in the industry and how they compete. Here are the four basic market structures: remember Because this inverse relationship between price and quantity demanded holds true for nearly all goods and services, economists refer to it as the law of demand. But quite frankly, the law of demand becomes much more immediate and interesting if you can see it rather than just think about it. Creating a demand curve by plotting out the data Widespread literacy and education: Without highly educated inventors, new technologies don’t get invented. And without an educated workforce, they can’t be mass-produced. Consequently, the decision that many nations made to make primary and then secondary education mandatory paved the way for rapid and sustained economic growth.

Why poorly designed property rights are responsible for environmental problems such as global warming, pollution, and species extinctions Of course, not everything is perfect. Grinding poverty is still a fact in a large fraction of the world, and even the richest nations have to cope with pressing economic problems like unemployment and how to transition workers from dying industries to growing industries. But the fact remains that overall, the modern world is a much richer place than its predecessor, and most nations now have sustained economic growth, which means that living standards rise year after year. Identifying the institutions that raise living standards Are people really free to make decisions? Aren’t they constrained by legal, moral, and social standards? You like learning why as well as what. That is, you want to know why things happen and how they work instead of just memorizing factoids.

And despite the fact that there have always been really smart people in every society on earth, it wasn’t until the late 18th century, in England, that the Industrial Revolution actually got started and living standards in many nations rose substantially and kept on rising, year after year. Microeconomics focuses on individual people and individual businesses. For individuals, it explains how they behave when faced with decisions about where to spend their money or how to invest their savings. For businesses, it explains how profit-maximizing firms behave individually, as well as when competing against each other in markets. This book is set up so that you can understand what’s going on even if you skip around. The book is also divided into independent parts so that you can, for instance, read all about microeconomics without having to read anything about macroeconomics. The table of contents and index can help you find specific topics easily. But, hey, if you don’t know where to begin, just do the old-fashioned thing and start at the beginning. The graphs economists use are almost always visual representations of economic models. An economic model is a mathematical simplification of reality that allows you to focus on what’s really important by ignoring lots of irrelevant details. For instance, the economist’s model of consumer demand focuses on how prices affect the amounts of goods and services that people want to buy. Obviously, other things, such as changing styles and tastes, affect consumer demand as well, but price is key.Snagging a job as an economist is fiercely competitive—and highly lucrative. Having microeconomics under your belt as you work toward completing your degree will put you head and shoulders above the competition and set you on the course for career advancement once you land a job. So what are you waiting for?

If people make choices on the basis of which ones will bring them the most happiness, they need a way of comparing how much happiness each possible thing brings with it. Along these lines, economists assume that people get a sense of satisfaction or pleasure from the things life offers. Sunsets are nice. Eating ice cream is nice. Friendship is nice. And I happen to like driving fast. The best way to see the quantity demanded at various prices is to plot it out on a graph. In the standard demand graph, the horizontal axis represents quantity, and the vertical axis represents price. Extending that reasoning even further, you can see that demand curves with changing slopes (that is, demand curves that aren’t perfectly straight lines) tell you that the relationship between price and quantity demanded varies. On the steeper parts of such curves, a change in price causes a relatively small change in quantity demanded. On the flatter part of such curves, a change in price causes a relatively large change in quantity demanded. Using the demand curve to make predictions They’re allocatively efficient, which simply means that they produce the goods and services that consumers most greatly desire to consume. Perfect competition: Perfect competition happens when numerous small firms compete against each other. Firms in a competitive industry produce the socially optimal output level at the minimum possible cost per unit.Economics gets to the heart of these issues, analyzing the behavior of individuals and firms, as well as social and political institutions, to see how well they convert humanity’s limited resources into the goods and services that best satisfy human wants and desires. Considering a Little Economic History