This book grew out of notes prepared for a one-semester non-departmental course in economics at METU. The aim is to convey the basic mechanisms of how the economy works. The first, as usual, is the price mechanism of how the economy works. The first, as usual, is the price mechanism and is the subject matter of Chapters 2 and 3. The argument is built around a demand-supply framework to explain the competitive mechanism. While the demand analysis is fairly conventional, the supply analysis diverges completely from the marginalist perspective, the standard mode of analysis in most introductory texts. The supply analysis reflects the classical concept of competition, whereby market forces act to equalize the rate of profit across industries. For this reason a supply formulation taking the "normal rate of profit" explicitly into account is developed. In the appendix to Chapter 3, the basic principles of the marginalist analysis is given with a view of setting out the differences with the supply analysis employed in the book. This is also where the main difference between the alternative approaches to income distribution is highlighted. Chapter 4 sets out the principles of government intervention within a partial equilibrium context.