Welcome to ECO 284
Principles of
Microeconomics
Please pick up a copy of the syllabus
How to Contact Me
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Mr. John D. Eastwood
Office CBA Room 247
Phone: 523-7353
Fax: 523-7331
E-mail: John.Eastwood@nau.edu
Office Hours:
Monday, Wednesday and Friday,
10:15 AM – 11:15 AM;
Tuesday and Thursday, 1:15 –2:15 PM;
also by appointment
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Prerequisite
 Eligible to take MAT 110 or a higher course
 If you lack the prerequisite, contact me as
soon as possible!
 You are requested to drop the class if you
lack the prerequisite or an approved waiver.
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Course Objectives
 Topics:
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Overview of a market economy; supply and
demand; graphical techniques; consumer
behavior; production and costs; prices in both
product and resource markets; and
international economics.
 Successful students will learn to analyze
economic issues in an objective manner.
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The Required Text Package
 William A. McEachern, Microeconomics: A
Contemporary Introduction, Sixth Edition,
Thompson -- Southwestern, 2003.
 New copies of this text are packaged with
a CD-ROM containing a software package,
“McEachern Xtra!” and
a four-month subscription to the Wall Street
Journal. To subscribe, fill in the card and
submit it directly to the Wall Street Journal.
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Announcements & Calendar
Start at the college web site
http://www.cba.nau.edu/
Follow the links to my name, and then my
web page
http://www.cba.nau.edu/facstaff/eastwood-j/
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Graded Work:
 Exams are 60% of your grade
 Term paper is 16%,
 Problem sets are 12%,
 Quizzes and in-class work are 12% of your
grade
 Your grade is computed as a weighted
average of your scores – see example
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Grading Scale
 90% or better earns an “A”
 80% to 89% earns a “B”
 70% to 79% earns a “C”
 60% to 69% earns a “D”
 59% or less earns an “F”
 If the average on an exam falls below a C, I
may curve that exam.
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Academic Dishonesty
1. Plagiarism: any attempt to pass off other’s work as your
own
2. Cheating: any attempt to gain an unfair, hidden advantage
over one’s fellow students
3. Fabrication: any attempt to present information that is not
true
4. Fraud: any attempt to deceive an instructor or
administrative officer of the university
5. Any attempt to facilitate academic dishonesty
Excerpt from the NAU Student Handbook, Appendix G
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Questions?
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Why Study Economics?
 The purpose of studying
economics is not to acquire a
set of ready-made answers to
economic questions, but to
learn how to avoid being
deceived by economists.
– Joan Robinson, 1903-1983
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Why Not?
 Within business colleges, Economics is
sometimes referred to as the “Mother
Discipline.”
 Accounting, Finance, Marketing, and
Management are disciplines that apply
economic principles.
 Many political issues concern Economics.
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B.S.B.A. in Economics
 Degree requirements
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Economics courses
24 hours
Other major requirements 18 hours
Business Core
42 hours
Liberal Studies
35 hours
General Electives
1 hours
Total
120 hours
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B.S. in Economics
 Degree requirements
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Major
Minor
Liberal Studies
General Electives
Total
42 hours
18-24 hours
35 hours
25-19 hours
120 hours
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Minor in Economics
 Requires 18 credit hours
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ECO 284, and ECO 285 +
Four upper-division economics courses
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Certificate
 Business Economics
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Requires 15 credit hours
ECO 284, and ECO 285 +
Three upper-division economics courses
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Other Business Majors
 Accounting
 Computer Information Systems
 Finance
 Management
 Marketing
 B.A. in Liberal Studies
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Enterprise in Society Emphasis
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The Basics of Economics
 What is Economics?
 A large subject — How do we approach it?
 Heilbroner’s analogy: think of the economy as
an unexplored continent.
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Enter the continent on foot...
 and study at close range the persons and
firms whose activities (when combined) form
the economy.
 Microeconomics is the study of how
consumers, firms, and resource owners
interact in individual markets.
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Fly over the continent...
 and note the characteristics of the economy
as a whole.
 Macroeconomics is the study of the entire
economy.
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A third approach...
 It focuses first on how the "economic
continent" came to be there in the first place,
and on what forces have shaped and
continue to shape its landscape.
 This approach is known as economic history.
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Primarily Microeconomics
 Economic history adds perspective on
contemporary problems such as ...
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De-regulation,
Environmental degradation,
International trade,
Monopoly power, and
Welfare reform.
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History of Economic Thought
 The study of how economic ideas and
philosophies have evolved
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What is Economics?
 Woody Allen:“ Economics is about money and why it is
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good,"
Heilbroner: “Economics is the process of providing for the
material well-being of society.” (too narrow)
“It’s what economists do.” (too broad)
However, because many goods are scarce, society must
make choices.
Thus Economics is often defined as the study of how
scarce resources are best allocated among competing ends.
Economics is the science of choice — it explores the
choices that we make as we cope with scarcity.
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Resources
 Inputs (factors of production) used to produce
goods and services
 Thus, goods and services are scarce because
resources are scarce
 Four general categories (CELL)
Capital
 Entrepreneurship
 Labor
 Land
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Labor
 Broad category of human effort – physical and
mental
 Effort requires time
 Labor is scarce because time is limited
. . . and cannot be stored.
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Capital
 Human creations used in production
Physical capital: structures, tools, equipment,
infrastructure
 Human capital: knowledge and skills
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Land & Entrepreneurial Ability
 Land
All natural resources
 “Gifts of nature”
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Fields, forests, lakes & rivers
Mineral deposits, oil & natural gas fields, etc.
 Entrepreneurial Ability
Managerial & organization skills
 Risk taking
 Imagination
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Payments for Resources
 Wages  labor
 Interest  capital
 Rent  land
 Profit  entrepreneur
Entrepreneur claims what is left over
 Profit = Revenue minus cost
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Goods and Services
 Resources can be combined to produce …
 Goods --tangible
 Services --intangible
 Scarce Resources  scarce goods & services
 Scarce  the quantity desired exceeds the amount
available at a zero price
 Scarcity  Choice
 Free goods are those available at a zero price
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