Consumption - What is Microeconomics? What is Economics? Biology is the study of living things. History is the study of the past Economics is the study of Resource allocation How do people and societies deal with scarcity? Three questions are generated What is to 2. How is it to be produced? 3. Who gets the output? In fact, economics has grown to study many other social phenomena How do economists answer questions like these? Using models Consumption- What is Microeconomics? Models A model is not the real world. A model is not realistic. A model may be based on assumptions that are dubious or sometimes plainly false. A model is an abstraction implification and an explanatory tool. A model takes some salient feature(s)of the world and explores it within a logical framework Economists do not even try to build a"general theory of the world. Instead models of particular phenomena are proposed. The idea is to gain insight into elationships between real world objects The aim is to explain, describe and predict and one day in the far far future erhaps to adviseConsumption — What is Microeconomics? 5 What is Economics? • Biology is the study of living things. History is the study of the past. Economics is the study of... Resource allocation? • How do people and societies deal with scarcity? Three questions are generated: 1. What is to be produced? 2. How is it to be produced? 3. Who gets the output? • In fact, economics has grown to study many other social phenomena. • How do economists answer questions like these? Using models. Consumption — What is Microeconomics? 6 Models • A model is not the real world. A model is not realistic. A model may be based on assumptions that are dubious or sometimes plainly false. A model is an abstraction, a simplification and an explanatory tool. • A model takes some salient feature(s) of the world and explores it within a logical framework. • Economists do not even try to build a “general theory of the world”. Instead models of particular phenomena are proposed. The idea is to gain insight into relationships between real world objects. • The aim is to explain, describe and predict — and one day in the far far future perhaps to advise