Fundamental equations in economics?

Question

For the other sciences it's easy to point to the most important equations that ground the discipline. If I want to explain Economics to a physicist say, what are considered to be the most important equations that underly the subject which I should introduce and attempt to explain?

Answer 1

Microeconomics, at its core, is about how individuals and firms make decisions constrained under scarcity. If I had to boil the discipline down to one equation it would be that optimization occurs when

MB = MC

That is marginal benefit equals marginal cost. Marginal benefit is the extra happiness, utility, or revenue an individual or firm receives from consuming or producing one extra unit of a good, service or action. The marginal cost is the extra cost from consuming or producing one extra unit.

Looking specifically at a consumer, if the MB > MC then the consumer will be better off by consuming more of the good in question, as the benefits of consuming one more unit outweigh the costs. However if MC > MB they will be better off by consuming less of the good as their current level of consumption the costs of the last good consumed outweigh the benefits. When MB = MC their happiness (utility) is maximized and they will not want to increase or decrease their level of consumption of the good.