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| | == What Is Economics? == | | == What Is Economics? == |
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| − | Why should we even spend time on an economics course? Why is it important? And what is economics, anyway? | + | Why should we even spend time on an economics course? Why is it important? How should we define "economics", the term itself? |
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| − | We all need goods and services. The goods that are essential include food, clothes, cars, and books. The services that we need include help by doctors, dentists, teachers, lawyers and barbers.
| + | It is often helpful to think about and improve the definition of an important word, as a way of increasing your understanding of it. Finding and improving definitions of the words "faith" and "forgiveness" are helpful exercises. Let's work on identifying and improving the definition of the word "economics". |
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| | + | The Merriam Webster's Collegiate Dictionary (1994) defines "economics" to mean: |
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| | + | :"a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services" |
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| | + | That definition has several terms that cry out definitions of their own, such as "social science" and "goods and services," You might acquire a habit of having a dictionary handy to look up words when you need to, and even when you think you know the meaning in order to see how the dictionary defines it. |
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| | + | Perhaps we can improve on that definition of economics. But let's first try to define what "goods and services" are, because they are found in the definition of "economics". At first glance, "goods and services" are the things and activities that someone is willing to purchase. Maybe you are not willing to pay for them, but someone is. Essential goods include food, clothes, cars, and books. We all pay in some way for those. The services that we need include help by doctors, dentists, teachers and barbers. A "good" is a tangible "thing"; a "service" is an activity. |
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| − | But we also want goods and services beyond our basic needs. We sometimes go to restaurants even though they are more expensive than eating at home. We pay money for entertainment, such as movies. We buy food that we like more often than food that we absolutely need. We pay for luxury items to enjoy and sometimes even impress others, such as fancy clothes or cars.
| + | The meaning of "goods and services" extends beyond our basic needs. We do not '''''need''''' to go to a restaurant or a Yankees baseball game, or see a movie. We do not '''''need''''' to buy ice cream in order to survive. Sometimes people buy things like fancy clothes or cars in order to impress others. |
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| | + | So the meaning of "goods and services" goes far beyond what people need, and includes anything they want, and that some people are willing to pay for. Note that not everything people want is something they are willing to pay for. We all want air in order to breathe, but we are not willing to pay for air. "Air" is not a "good or service." We all want friendship too, but that's not something that can be purchased. We all want the Yankees to win the World Series (well, not all of us do!), but we cannot directly buy that either. At most we can buy tickets in exchange for the Yankees' playing a game and ''trying'' to win the World Series. That "service" by the Yankees is a form of entertainment, like a music rock concert or a movie. |
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| | + | Now we are ready to define economics. We do not have to use the vague term "social science" as Merriam Webster's dictionary did. Our definition can simply be this: |
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| | + | :Economics is the study of the flow of goods and services. |
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| | + | Synonyms for "the flow" in this context include "market", "transactions", "making, buying, selling and consuming," and what Merriam Webster's dictionary said above: "production, distribution, and consumption." |
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| | + | Your first question on the homework will be to try to improve on my definition of economics indented shortly above, and briefly explain why you think your version is an improvement. |
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| | + | == The Study of Economics == |
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| | Each day billions of buying and selling decisions are made in America. Economics consists of studying those decisions. If the price of meat is doubled, will more or less meat be sold? (Less.) We will be analyzing pricing and buying behavior throughout this course. | | Each day billions of buying and selling decisions are made in America. Economics consists of studying those decisions. If the price of meat is doubled, will more or less meat be sold? (Less.) We will be analyzing pricing and buying behavior throughout this course. |