Introductory Economics

What you will learn

• Explain scarcity, trade-offs, and opportunity cost.
• Use supply and demand to reason about markets.
• Compare costs and benefits of a small change in a decision.
• Interpret basic measures such as inflation, unemployment, and output.
• Separate economic models, evidence, and value judgments in policy debates.

Common challenges

• Graphs tell a causal story

  Label both axes and state what is held constant. Describe the change in words before drawing it.

• College pace and unfamiliar reading

  A survey may move quickly between models and real-world applications. Budget independent reading and problem-solving time rather than relying only on lectures.

• Movement versus a shift

  A change in a good's own price causes movement along its demand curve. Other relevant changes, such as income or preferences, can shift demand.

• Models are useful but limited

  List a model's assumptions before applying it. Economic reasoning can clarify trade-offs without settling every question about fairness or policy.

Key concepts

Scarcity and opportunity cost

Resources and time are limited, so choosing one option means giving up others. Opportunity cost is the value of the next-best alternative forgone.

Marginal thinking

Many decisions compare the extra benefit of a small change with its extra cost. Past costs that cannot be recovered should not determine the next step.

Supply and demand

Supply describes quantities sellers are willing to offer at different prices; demand describes quantities buyers are willing and able to buy. The model holds other relevant conditions constant.

Equilibrium

Market equilibrium occurs where quantity supplied equals quantity demanded. It does not automatically mean an outcome is fair or socially best.

Microeconomics and macroeconomics

Microeconomics studies choices and individual markets. Macroeconomics studies economy-wide patterns such as inflation, unemployment, and growth.

Economic indicators

Indicators summarize parts of an economy, such as production or price changes. No single indicator captures every part of well-being.

How to prepare

• Review percentages, ratios, and simple algebraic equations.
• Practice plotting a line and interpreting its slope.
• Write an everyday choice and identify its next-best alternative.
• Read a short economic news explanation and separate measured facts from opinions.

Study habits that help

• Draw each graph from memory and explain what changes and what stays fixed.
• Use a concrete example for each new model.
• Practice percentage changes with the original value clearly labeled.
• Separate a model's prediction from your opinion about whether the outcome is fair.

What to expect

Typical workload

Moderate

Time outside class

Typically about 6–9 hours outside class weekly for a three-credit course; college, instructor, and math emphasis vary. A general college rule of thumb is about 2–3 study hours outside class for each hour in class.

Pace

Introductory courses build models step by step, though some focus only on microeconomics or only on macroeconomics.

How it is usually graded

Courses typically use exams, quizzes, problem sets, and sometimes short policy analyses or data assignments.

Skills that help

• Graph interpretation
• Quantitative reasoning
• Model-based explanation
• Reading evidence critically

What teachers usually expect

• Label graphs and explain their assumptions.
• Distinguish a change in a curve from movement along it.
• Support economic claims with reasoning and relevant evidence.

Before you start

• Colleges commonly expect basic algebra and college-level reading readiness; some courses use placement or an earlier math course.
• Check whether the course is a broad survey, microeconomics, or macroeconomics; prerequisites differ by college, so check the college catalog.

These are general descriptions of a typical course. Workload, pace and prerequisites differ by school and instructor, so check with your counselor, advisor or the course catalog.

How it connects to majors

• Economics
• Business administration
• Public policy
• Finance
• Environmental studies

Flashcards

Practice questions

Vocabulary

Scarcity

The condition of having limited resources relative to wants.

Opportunity cost

The value of the next-best alternative given up.

Incentive

A benefit or cost that can influence a choice.

Equilibrium

A market situation in which quantity supplied equals quantity demanded.

Elasticity

A measure of how responsive one variable is to a change in another, using percentage changes.

Inflation

A sustained increase in an economy's overall price level.

Gross domestic product

The market value of final goods and services produced within an economy in a period.

Externality

An effect on others that is not fully included in a market transaction's costs or benefits.