Microeconomics

Abstract

It would not be easy to avoid all discussion of economics in twenty-first century America. You would have to keep your distance from television, radio and newspapers, not to mention casual conversations on the job, over a beer, or at a family gathering. In fact, our society is saturated with economics, reflecting the great power that economic events have over our lives, even though the forces that produce them are often mysterious. Economics is like the weather, only more so: all around us, obviously important, subject to prediction but only slightly to control. Unfortunately, much of the folk wisdom about economics—the assumptions behind casual discussion that are often reflected in the media—is wrong. It misrepresents what economics is and what it has to say to us. Since we get these messages, consciously and unconsciously, dozens of times each day, the first step in studying economics is to unlearn the assumptions we pick up in daily life. This is not easy to do. I will discuss a few of the more common myths in this chapter, but it is my experience that deeply ingrained ideas do not fade away easily. You will want to return to these myths later on, as we gradually build up a body of theories to replace them.