Here are four short and diverse illustrations of microeconomics you might encounter: deciding what to do with your time and money, buying or selling on eBay, visiting a large city, and reading about a soccer game. After you have finished your study of microeconomics, you will see these concepts very differently from the way you see them now. You may not know it, but your everyday life is filled with microeconomics in action.
Wouldn’t you rather be doing something else with your time right now, instead of reading an economics textbook? You could be surfing on the Internet, reading blogs, or updating your Facebook profile. You could be reading a novel or watching television. You could be out with friends. But you aren’t. You have made a choice—a decision—to spend time reading this chapter.
Your choice is an economic one. Economics studies how we cope with competing demands for our time, money, and other resources. You have only 24 hours each day, so your time is limited. Each day you have to divide up this time among the things you like or need to do: sleeping, eating, working, studying, reading, playing video games, hanging out in your local coffee shop, and so on. Every time you decide to do one thing instead of another, you have made an economic decision. As you study economics, you will learn about how you and other people make such choices, and you will also learn how to do a better job when making these decisions.
Money is also a limited resource. You undoubtedly have many things you would like to buy if money were no object. Instead you must choose among all the different things you like because your money—or, more precisely, your income—is a limited resource. Every time you buy something, be it a T-shirt, a breakfast bagel, or a new computer, you are choosing to forgo something else you could have bought instead. Again, these are economic decisions. Economics is about how you make choices. Whenever there is a limited resource—be it your time, the...