LECTURE NOTE for Week #1 Part 1
Principles of Microeconomics
Microeconomics is to study decision making processes of individual households, firms, and the
industries, and their outcomes in markets.
* Key points to be successful in this course
1. Online Class Management
A. To focus, not to be distracted.
B. Effective use of breaks.
C. Effective use of textbook and note.
∙ It is recommended to read the textbook as much as possible, but it is also very important to
know the points emphasized in the class.
∙ The detailed written text will be provided only for the first couple of weeks, and after that, you
are required to be able to make your own class notes WITHOUT ASSISTANCE LIKE WHAT YOU
HAVE TODAY.
TRY TO MAKE YOUR OWN CLASS NOTE TODAY, AND IF YOU ARE NOT ABLE TO MAKE DETAILED
CLASS NOTE TODAY, OR EVEN IF YOU ARE ABLE TO MAKE NOTE TODAY BUT NOT SURE IF YOU
CAN IN THE FUTURE WITHOUT ASSISTANCE LIKE WHAT YOU SEE TODAY, YOU MUST DROP
FROM THIS CLASS IMMEDIATELY.
D. What to do if you have a question while you are watching the lecture
Take a pause (by pushing the pause button) and think about the question, and try to get the
answer for the question using the resources around you.
Do not spend too much time on the questions, though. If you do not get the answer yourself
within a few minutes, then mark on the point unresolved and continue on with the lecture to
finish the whole lecture.
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You should revisit the question later, and try to get the answer yourself again, or ask me about
the question using the Q&A board.
2. Other Important Points
A. Homework
Homework will account for a significant portion of evaluation points that will determine your
letter grade.
Many exam questions will be similar to homework problems, so it is important for you to be
able handle homework problems.
B. Team Work
You will complete and submit homework in a team that will typically consists of three
members.
You must first work on all of homework problems by yourselves, instead of dividing the
homework problems into three parts and work on only one third.
After you complete the homework problems by yourselves, you then communicate with your
team members, and select the best answers among team members and submit one set of
answers by the due date and time.
Each team will have a team leader who is responsible for submitting the homework.
Other team member’s non-participation should not be an excuse for your not being able to
complete the homework by the due date and time, but you need to report to me the lack of
active participation by your team member(s), and the scores of non-participating members will
be lowered.
Chapter 1. Ten Principles of Economics
I. Principle 1: People Face Trade-offs
It is now restated as follows.
Principle 1: An action by a rational choice entails a cost.
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(1) Definition
A rational choice is to select one from multiple alternatives in such a way that the action is
consistent with a given goal.
An economic decision maker has to have a goal first. For instance, the goal of a consumer is to
maximize her satisfaction or utility. The goal of a firm or a business is to maximize its profit.
So, a consumer’s rational choice has to be the one that maximizes her satisfaction. Likewise, a
firm’s action with a rational choice has to maximize its profit.
* Note: Actions without a rational choice
a. An action by habit
b. A compulsory action
(2) Restating the Principle in a Logical Statement
In this section, the Principle 1 will be broken down into components of the principle, and
these components will be logically linked to each other.
To make a change in this direction, the first component of the Principle 1 is obtained in the
form of Statement A.
A: An action is a rational choice.
The second part of the Principle 1 can be decomposed into another statement, Statement B.
B: The action entails a cost.
These two component statements can be logically linked together in a short form,
𝐴 → 𝐵.
That is, “A implies B.” Or, we can say
“If A is true, then B is true.”
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(3) Examples
Example 1: Use of time to study economics
CHECKPOINT QUESTION 1-1: In the example of studying economics, it is assumed that you
study economics by your rational choice. What are other two alternative forces that Professor
Park said may drive you to study economics? The answer is related to actions without a
rational choice explained in the lecture for Week #1 Part 1.
Example 2: A household expenses for educating children.
Example 3: Increase in defense budget.
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