Ch 1: Foundational Economic Concepts

About This Chapter

This chapter will lay out the basics of economics. Our short video lessons will give you a foundation of economic concepts like consumer choice, resource allocation, economic models, opportunity cost and more!

Foundational Economic Concepts - Chapter Summary & Objectives

Starting with the basics is a great way to understand microeconomics. Our expert instructors will walk you through these basics with short, engaging video lessons, and you'll have the chance to take a self-assessment quiz at the end of each lesson to see how well you know the material. By the end of this chapter, you'll be able to:

  • Define economics and explain the various types
  • Describe why consumer choice is important in economics
  • Understand the difference between comparative and absolute advantage
  • Use the Production Possibility Curve to illustrate economic conditions
  • Give an overview of various economic models
  • Provide real world examples of opportunity cost

VideoObjective
What is Economics? - Definition & TypesLearn basic concepts related to economics and its different types.
The Importance of Consumer Choice in EconomicsDiscover how understanding a consumer is vital to a business' economic success.
Microeconomic Resources: Scarcity & UtilityUnderstand that resource are scare and that people will gravitate to securing the greatest utility.
Understanding the Challenge of Resource AllocationDescribe the concept of scarcity and how different forms of economics strive to allocate resource effectively.
What Is the Economic Man? - Concept, Assumptions & Constraints Summarize the Economic Man, concept.
Common Logic Pitfalls in EconomicsAnalyze common logical fallacies as they relate to economics.
Microeconomics vs. MacroeconomicsUnderstand the differences between microeconomics and macroeconomics.
Comparing Normative & Positive EconomicsKnow the difference between normative and positive economics.
Comparative vs. Absolute Advantage in MicroeconomicsNote the ways comparative and absolute advantage differ from one another.
An Overview of Economic Models & UsesGive examples of different economic models and their uses.
Marginal Analysis in EconomicsExplain how marginal analysis is used to make decisions.
The Role of Property Rights in Economic TheoryExplain private property rights and their relation to economic theory.
Using the Production Possibility Curve to Illustrate Economic ConditionsLearn how to use the Production Possibility curve to illustrate economic conditions.
Opportunity Cost: Definition & Real World ExamplesDefine Opportunity Cost and provide real world examples.

14 Lessons in Chapter 1: Foundational Economic Concepts
Test your knowledge with a 30-question chapter practice test
What is Economics? - Definition & Types

1. What is Economics? - Definition & Types

Few things affect the day-to-day lives of everyone more than the economy. In this lesson, you'll learn about economics, including some of its foundational topics and concepts. You'll also have a chance to take a quiz after the lesson.

The Importance of Consumer Choice in Economics

2. The Importance of Consumer Choice in Economics

Nothing makes a business happier than when we buy something they sell - well, maybe when we buy two of what they sell! This lesson explains why smart companies and governments try to understand everything about you to sell you more.

Microeconomic Resources: Scarcity & Utility

3. Microeconomic Resources: Scarcity & Utility

For economics to work, we must assume that resources are scarce and that people will work to secure the greatest utility possible. This lesson explains both scarcity and utility and what they mean for people everywhere.

Understanding the Challenge of Resource Allocation

4. Understanding the Challenge of Resource Allocation

By now, you've probably figured out that all resources are scarce. But how do we allocate resources to make the most of that scarcity? This lesson explains how economists allocate resources, as well as three of the major philosophies influencing such choices.

What Is the Economic Man? - Concept, Assumptions & Constraints

5. What Is the Economic Man? - Concept, Assumptions & Constraints

Just because the Economic Man doesn't exist doesn't mean that he's not important. This lesson explains how the Economic Man is really quite useful to economists for a variety of reasons.

Common Logic Pitfalls in Economics

6. Common Logic Pitfalls in Economics

Economics is a pretty straightforward subject, but it can be plagued with plenty of logical pitfalls. This lesson discusses swimsuits, mansions, and politicians to explain some of the most common logical fallacies.

Microeconomics vs. Macroeconomics

7. Microeconomics vs. Macroeconomics

In this lesson, we learn how economics touches every aspect of human life. Focusing on the central ideas of scarcity and utility, we see how economics plays out in its two largest fields, microeconomics and macroeconomics.

Comparing Normative & Positive Economics

8. Comparing Normative & Positive Economics

In most sciences, you can largely ignore opinions. However, in economics, we call opinions normative statements and economists must pay attention to them. This lesson details the differences between normative statements and positive statements.

Comparative vs. Absolute Advantage in Microeconomics

9. Comparative vs. Absolute Advantage in Microeconomics

Ever wonder why economies don't just try to do everything themselves and instead rely on trade as such an important idea? This lesson on comparative vs. absolute advantages helps to explain why.

An Overview of Economic Models & Uses

10. An Overview of Economic Models & Uses

For this lesson on economic models, you won't need any plastic cement or craft knives. That said, a lot of very useful detail can still be captured and portrayed in economic models, as this lesson demonstrates.

Marginal Analysis in Economics

11. Marginal Analysis in Economics

This lesson explains the economic concept of marginal analysis, which is used in economics to help producers and consumers make economic decisions. Variables, scarcity, marginal benefit and cost, and profit maximization are explained.

The Role of Property Rights in Economic Theory

12. The Role of Property Rights in Economic Theory

In this lesson we will explore the concept and types of property rights in a capitalist society. We will also look at how the existence of these rights can incentivize productive economic activity.

Using the Production Possibility Curve to Illustrate Economic Conditions

13. Using the Production Possibility Curve to Illustrate Economic Conditions

This lesson explains the economic concept of the production possibility curve, which is used to illustrate conditions and make good business decisions. Trade-offs, economic efficiency, economic inefficiency, and economic growth are explained.

Opportunity Cost: Definition & Real World Examples

14. Opportunity Cost: Definition & Real World Examples

Learn the most important concept of economics through the use of real-world scenarios that highlight both the benefits and the costs of decisions. Opportunity cost is a simple yet powerful principle that reveals how to make the best economic decisions possible, and it explains why people make the choices they do.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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