Welcome to Econ 1, Winter 2009
Instructor: John Hartman
Teaching Assistant: Rosemarie
Lavaty
First issue: Crashers
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90 students max, due to the nature of
this class
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No additional room in this class
Interactive parts to the class
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Class size should be 50-80 students for these
interactive components
First issue: Crashers
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Crash list
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Must be sophomore status or up
To be eligible to add this class, you must do all of
the following this week
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Show up to each lecture
Show up to any section you are able to add
Provide proof of sophomore status or higher to me
Failure to do any of the above will make you
ineligible to add this class
I may not be able to add all “eligible” crashers
First issue: Crashers
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No add codes distributed until next
week
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Last year, only 6 students added
Enrolled students get priority for seating
Other options for Econ 1
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Prof. Crouch is teaching another lecture
of Econ 1 this quarter
Prof. Sonstelie is scheduled to teach
Econ 1 in the spring, with 420 spaces
available
Econ 1, and 2 are scheduled to be
taught in the summer
Second issue: Note taking
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My suggestion is for you to write notes
minimally
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Lecture slides will be available on class
website
Third issue: How this class
will work
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Remember that this is a small class 
Ask questions if things are not clear
The syllabus is posted online  See
http://econ.ucsb.edu/~hartman/
Attendance is an important part of this
class, both directly and indirectly
If reading this size font is difficult, I urge you to sit near the
front
Who is this?
Who is this?
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Ben Bernanke
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Chair of the
Board of
Governors of the
Federal Reserve
System
Co-author of
your Econ 1
textbook
Textbook for this class
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Frank/Bernanke (“F/B”)
Principles of Microeconomics
Brief Edition
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“Brief” saves you $$$
Good substitutes: 2nd, 3rd, or 4th edition, or
Principles of Economics by F/B
Published by McGraw-Hill/Irwin
Optional study guide
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Expected to be available in mid-January
Check regularly with bookstore for more
information
Office hours and review sessions
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Office: NH 2028
Office hours
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Mondays 12:30-1:30 pm
Wednesdays 2:15-3:15 pm
No formal review sessions
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Some time will be spent in lectures and
sections
Some important dates
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Three tests, scheduled for:
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Monday, Feb. 9 (in lecture)
Monday, March 2 (in lecture)
Tues., March 17 (final, 8:45-10:45 am,
room(s) to be announced)
Test dates will likely not change
Check syllabus for information on
allowable calculators
Grading
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If you do not miss a test:
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Two best tests count 40% each
Lowest test counts 20%
Exception: If your best test is the final, the
final will count 60% and the other two
tests count 20% each
If you do miss a test, check the syllabus
for details
Grading
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Since this is a small class, there is no
pre-set curve
However, the top students will be
guaranteed the highest grades (see
syllabus for more details)
Extra credit
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We will do various activities throughout
the quarter, many interactive
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Attendance and performance in these
activities will give you extra credit
You will also get extra credit (one time)
for class participation in lecture
(excluding today)
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Asking an intelligent question
Participating in an activity that includes a
subset of the class
Extra credit
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The student with the most extra credit
points at the end of the quarter will
receive a 5 percentage point boost to
grade
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Others will receive less than 5 percentage
points, formula to be determined at the
end of the quarter
Today: An introduction to
economics
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What is economics?
Money?
Finance?
Today: An introduction to
economics
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What is economics?
Money?
Finance?
Part of the study of economics involves
money and finance
As we will see over the next 10 weeks,
economics covers many topics
An introduction to economics
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What is economics?
Frank and Bernanke (FB) define
economics as “the study of how people
make choices under conditions of
scarcity and of the results of those
choices for society” (p. 4)
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Key word to remember: “choice”
Why do we make the choices
that we do?
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7 core principles of economics
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Scarcity
Cost-benefit analysis
Incentives matter
Comparative advantage
Increasing opportunity cost
Equilibrium
Efficiency
Scarcity
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Nobody has everything that he/she wants
To get more of something good, something
else must be given up
Most people seem to have most things that
are “highly valued”
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Good thing
We will establish what “highly valued” means
Cost-benefit analysis
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Cost-benefit analysis: Think marginal
Criterion for doing something
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Marginal benefit should be at least as great
as marginal cost
Incentives matter
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Cost-benefit analysis is important in
predicting individual behavior
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Microeconomics focuses on individual
behavior
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For macroeconomics topics: Wait until Econ 2
Comparative advantage
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In simple economies: Everyone does
best with specialization and trade
In more complex economies: ON
AVERAGE, everyone does best with
specialization and trade
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Example: When trade opens up, one
person may have to change jobs and earn
less; 100K people pay $1 less on the good
Increasing opportunity cost
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Use resources with the lowest
opportunity cost first
As with cost-benefit analysis, remember
to think in terms of marginal
Equilibrium
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Two types for this class
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Market equilibrium
Nash equilibrium (game theory)
No unexploited opportunities for
individuals in either type of equilibrium
Efficiency
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The more efficient an economy is, the
more consumption can occur
If an economy improves efficiency, each
person’s consumption can increase
Caution: Equilibrium and efficient
sometimes are the same; sometimes
they are not
Summary
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Crashers: Keep showing up until I have
more information
Three tests and extra credit determine
your grade
7 core principles will be the focus of
Econ 1
For Wednesday
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Read the syllabus: http://econ.ucsb.edu/~hartman/
Buy the Frank/Bernanke text book
If needed, buy a non-programmable four-function or
scientific calculator that is NOT a communication
device
Read Chapter 1
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Read appendix if you think that your graphing skills are
weak
Try to think like an economist
In the future…
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If you must leave early, please sit near an
exit and leave quietly at least ten minutes
before the end of lecture
Otherwise, please do not pack your
belongings until I am finished with the lecture
Important announcements may be missed if
too many people are making noise
See you on Wednesday