1: Principles of Economics Last updated Save as PDF Page ID 3434 Boundless Boundless 1.1: The Study of Economics The study of economics makes individuals cognizant of their environment and better decision makers. 1.2: Individual Decision Making When scarce resources are used, actors are forced to make choices that have an opportunity cost. 1.3: Interaction of Individuals, Firms, and Societies Firms allow an economy to operate more efficiently and reduce the transaction costs of coordinating production. 1.4: Basic Economic Questions A firm’s production outputs are what it creates using its resources: goods or services. 1.5: Economic Models Mathematical economics uses mathematical methods, such as algebra and calculus, to represent theories and analyze problems in economics. 1.6: Differences Between Macroeconomics and Microeconomics Macroeconomics is the study of the performance, structure, behavior and decision-making of an economy as a whole.