how the product and labor markets work in the economy. We could easily add details to this basic model if we

wanted to introduce more real-world elements, like financial markets, governments, and interactions with the

rest of the globe (imports and exports).

Economists carry a set of theories in their heads like a carpenter carries around a toolkit. When they see an

economic issue or problem, they go through the theories they know to see if they can find one that fits. Then

they use the theory to derive insights about the issue or problem. Economists express theories as diagrams,

graphs, or even as mathematical equations. (Do not worry. In this course, we will mostly use graphs.)

Economists do not figure out the answer to the problem first and then draw the graph to illustrate. Rather, they

use the graph of the theory to help them figure out the answer. Although at the introductory level, you can
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