Terry Hillman - Economics

1. The Business Cycle: Defining the Short-Run Fluctuations in
   the Economy

No one likes a know-it-all. Most of us realize theres no such thinghow could there be? The world is far too complicated for someone to understand everything there is to know. So when you come across a know-it-all, you smile to yourself as they ramble on because you know better.

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Introduction

In learning about economics, were discovering how people share and make the best use of the scarce resources available to them. Economics is about people and their stories. The stories are of creativity and innovation. They are about the individual as well as the community. There are too many tales of booms and busts, greed and fear, rich and poor. Economics involves scholars who try to understand how the economy works.

From the earliest societieswhen the population was small, and people lived simply off the landto todays complex civilization, the driving force on the most basic level has been the need to sustain ourselves with food, clothing, and shelter. What we cannot make or sow ourselves, we must buy, and thus emerged the marketplace.

Microeconomics focuses on the study of the marketplacethe buyers and sellers. The central dynamic of the market is supply and demand. Drilling down, economists study the consumer and the firm. They are curious about consumer behavior and how consumers make choices. They also want to know at what price a business will be motivated to produce more goods. The ultimate goal of a business is to maximize its profit, and microeconomics describes how to achieve this goal.