Basic economic concepts

Some fundamental principles
Microeconomics versus Macroeconomics
Definition of economics.
Does this definition (problem) apply to everyone?
Key concepts
Opportunity Cost
What is the opportunity cost to you of taking this course?
Allocation mechanisms.
Economic systems and their allocation mechanisms.
How would you characterized the economic system of the U.S.?
The concept of relative price.
Why do economists insist on the concept of relative price?
3 functions of relative price.
Incentive function.
Productive factors (an aside)
Incentive function (cont.)
Signaling function of relative price.
Rationing function.
3 fundamental questions.
What to produce?
How to distribute output/income?