1.1: Individual Choice: The Core of Economics
The concept of opportunity cost is critical to understanding individual choice, because you always have to give up something in order to get another thing. In other words, the real cost of purchasing good A is equal to the value of the next best alternative (good B) that you give up in order to purchase good A. For example, what would you rather be doing instead of studying this course? The task that you have forgone in order to study economics is the opportunity cost of studying economics.
As you read the materials in this subunit, pay particular attention to what is meant by the "economic way of thinking". You will want to get used to using this lens or mode of thinking as a way to understand the work that economists do and why economic principles are so widely applicable across a number of fields. This subunit also examines the key differences between microeconomics and macroeconomics and between normative economics and positive economics.
Economics communicates information in a variety of formats: text, tables, graphs, mathematical expressions, and more. The following resources explain the form and function of a number of these formats, as well as their use within the context of economics.
Completing this section is optional. However, this course will expect you to have the following competencies, so be sure to review this subunit if you are not confident about your skill level:
- Read data from a table and transform it into a graph.
- Understand the coordinate plane ( , ) and its use for constructing graphs.
- Calculate the slope of a linear graph and be able to explain what the numeric value of a slope means and the significance of negative versus positive slopes.
- Understand the linear equation of a line, .
- Explain what an intercept is and how to determine it.