Honestly, supply and demand. It is the part of economics with which more people have a passing familiarity, yet where even so a deeper fuller understanding would bring big gains. Someone who deeply understands just supply and demand understands a great deal.
For example, understanding all of the many ways in which the real world deviates from a supply and demand world can give one a deep understanding of the likely places to expect both market failures and useful innovations.
DBx: Many are the people – indeed, many are the economists – who have only what Robin calls “a passing familiarity” with supply-and-demand analysis. Such people typically use this analysis far too mechanistically. And it’s easy from such a low perch to mistake all that you see from there as encompassing all that is and can be revealed by supply-and-demand analysis. These are the people who, like James Kwak , are fond of writing essays in popular outlets with the mistaken message that ECON 101 offers a wrongheaded basis on which to stand to analyze government policies such as minimum-wage legislation.
Yet as Robin correctly points out, deep knowledge of seemingly simple supply-and-demand analysis – serious pondering of what lies behind demand curves and supply curves, and an appreciation (at once creative and sober) of the role of time and trial-and-error experimentation in bringing about changes in the positions of both curves – is a source of astonishing insights into real-world economies. (If I were obliged to name the person who I regard as having been best among all at using supply-and-demand analysis in this productive way I would name the late Armen Alchian .)
To really know supply-and-demand analysis and how to apply it to reality is to really know economics. Anyone who is poor at using supply-and-demand analysis is a poor economist, even if he or she boasts a PhD in the subject from the most highly ranked economics department in the galaxy. Nothing – absolutely nothing – substitutes for a sound understanding of supply and demand. And any speculations, theories, or empirical findings that cannot be squared with lessons drawn from a deep understanding of supply and demand are speculations, theories, and empirical findings that are almost certainly bogus.