Economics begins with a simple observation: resources are scarce, but wants are unlimited. Every society — from a small village to a global superpower — must decide what to produce, how to produce it, and who gets what. These are the fundamental economic questions.
This unit introduces the concepts that underpin all of economics. You will learn why opportunity cost — the value of the next-best alternative you give up — matters more than money cost. You will see how marginal analysis drives rational decision-making: should you study one more hour, hire one more worker, or produce one more unit? The answer always depends on comparing the marginal benefit to the marginal cost.
The production possibilities curve (PPC) is your first economic model. It shows the trade-offs a society faces when allocating resources between two goods, and it reveals key ideas like efficiency, growth, and the cost of choosing one thing over another. You will interact with PPC graphs, drag points along the frontier, and see how technological change shifts what is possible.
You will also explore absolute and comparative advantage — the reason nations trade. Even if one country is better at producing everything, both countries gain from specializing in what they do relatively best. This insight, first formalized by David Ricardo in 1817, remains one of the most powerful ideas in economics.
Finally, you will compare economic systems — from command economies to free markets — and understand why most real economies are mixed. Markets coordinate millions of independent decisions through prices, but they do not always get it right, which sets the stage for everything else you will study.