"Understanding people in the ordinary business of life."

- Lord Alfred Marshall

Microeconomics is indeed a study of the ordinary. It is also ruthlessly commonsensical. As economist Frank Knight once observed, "It ain't [sic] what people don't know that does the most damage. It's that they know so danged much that just ain't [sic] so."

To be successful students must be open to the possibility of surrendering cherished but unexamined beliefs about the way the world works. (See note.) Economics demands that everything be examined in light of our core understanding of opportunity costs. People make decisions after weighing the costs of those decisions. Consequently people respond to incentives.

Microeconomics is the study of individual decision making units. People are such units, but so are corporations and other organizations. So this class will focus on individuals and organizations. [Macroeconomics, in contrast, is the study of the behavior of national economies. That will not be our focus.]

Economics is a fascinating discipline and beginning students are often enlivened at seeing the world through fresh eyes. So welcome, students and parents, to our class! Enjoy it.

Click here for a table of contents. [This is useful if the navigation links, above, are not appearing in your browser.]

Note: Nothing in the above should be read as meaning that beliefs about fundamental truth are the realm of economics. They're not. That's the business of epistemology and theology. But those branches of knowledge are important to us as economists because they guide and inform the decisions that people make. We cannot understand the way the world works without understanding how real people understand the world.

©2002 by Gary Nelson. All rights reserved.