The basics of academic economics are examined in this faculty guide. The modern management movement has reached American higher education and has created new expectations concerning the faculty's role. An earlier preoccupation with management methods has been replaced by concentration on evaluation. Faculty should share in the preparation of their campus allocation budgets as a whole, not simply their own or departmental concerns. Academic economics are best understood by examining educational costs and pricing, student demand, and the supply and demand of skilled academic personnel. Major income sources must be evaluated: student and service charges, governmental appropriations, philanthropic and donor contributions, and borrowing. Tuition charges, highly sensitive to market prices, are analyzed in some detail. Consideration is also given to understanding budgets and finance reports. Conflicting organizational pressures in academic institutions must be resolved differently than those arising in organizations based on industrial and hierarchical models. It is concluded that with or without collective bargaining, the faculty's best hope in helping determine its future lies in the principle of shared authority. (LBH)