Introduction to economics

Welcome to my  new blog about the principles of economics!

As a student you might already encountered a very simple yet interesting question, when you were looking for an apartment near your university.

Why are these apartments so expensive?

Economists will now start to ask themselves different questions:

• What is the reason for these prices?
• Are they fair?
• How could we change them, if we wanted to?

In order to answer these questions, we will need to cover 3 basic problems:

1. Consumer decision: How do individual consumers behave (eg. when looking for an apartment) and how can you calculate the demand.
2. Production decision: How do individual producers (eg. apartment supplier) behave and how can you calculate the supply.
3. The market: What happens if demand and supply encounter? What will the prices be?

The reason economics exists is shortage. Because if one resource is used up, someone else won't be able to get it. That is why all our economic decisions are based on comparisons.

• Should I live in an apartment or at home?
• If I have to pay such a high rent, how much of my money will be left for other things?

Thats why we need to compare our costs to the benefits.


Here are a few keypoints that we will go through within the next lessons:

• Willingness to pay
• Opportunity costs
• Cost benefit analysis
• Sunk costs
• Marginal analysis