Sources of Students’ Misconceptions in Economics, pp. 10 of 15

The following example taken from lesson observations of junior college economics classes illustrates how students’ lack of understanding of the economic way of thinking impedes their learning of the subject.

Example: “Huh, zero economic profit? No profit? Then why go into business?”

In this example, a student expresses confusion over the concept of “zero economic profit.” Of course, it is illogical for a firm to run its business if it earns no profit but does zero economic profit mean no profit in economics? Zero economic profit is the economist’s way of saying that the profit earned by the firm gives just enough incentive for the firm to remain in business. Firms include minimum return to the entrepreneur as part of the total cost so that even at zero economic profit, there is a surplus earned by the entrepreneur.

When students are introduced to a new, discipline-specific way of understanding reality, linguistic issues often cause this new perspective to compete with their existing understanding of specific terms. Teachers who anticipate these difficulties and highlight the distinctions between the meaning of these terms in economics and in ordinary usage at the start of new topics will be able to pre-empt confusion and misconceptions among students. Simulations can also be conducted in class to clarify concepts like equilibrium, signaling, shortages and surpluses. 

An Inspiring Quote

"[Open-mindedness] includes an active desire to listen to more sides than one; to give heed to facts from whatever source they come; to give full attention to alternative possibilities; to recognize the possibility of error even in the beliefs that are dearest to us."

~ John Dewey, How We Think

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