ECONS 101 – 1st Edition Lecture 1 Outline of Last Lecture Outline of Current Lecture I. Intro to EconomicsII. Normative/Positive AnalysisIII. Principles of ChoiceCurrent LectureWhat is Economics?- Economics: The social science that studies the production, distribution, and consumption of goods and services (book definition).o OR: The study of choices made under scarcity.o OR: What is the trade-off for making that choice?- What is Microeconomics?o How economic agents pursue their own (self) interests to make decisions and how these decisions affect society.o The goal is to determine the answers to:  What – What is the question? What is the solution? Who – Who is this effecting? Which companies are important? What science? HOW* - How are we going to achieve the best answer or solution?Normative and Positive Analysis:- In economic analysis, questions of efficiency and equity rely on the use of economic models.- Distinguishing between Normative and Positive Analysis:o Normative Analysis Concerned with what ought to be.o Positive Analysis Concerned with what is.- Economics should be about Positive Analysis, which measures the costs and benefits of different courses of action.o Positive Analysis shows the consequences of a particular policy.o Whether to do it or not is Normative Analysis.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Principles of Choice:- CORE (You):o Resources are scarceo Opportunity Costo Cost-Benefit Analysis decisionso Responding to Incentives- TRADE (Interaction):o Gains from Tradeo Equilibrium – Exploiting Trade Gaino Resources being used efficientlyo Markets  Efficiency- MACRO (Group):o One person’s spending is another person’s incomeo Government policies can change spendingo CREDIT : Productive capacity 