Introduction
Lecture 1
Course Objectives
Develop Analytical Thinking Skills
• Through the development of theoretical economic models and
concepts
• Through reference to statistical information
• Through the application of these models to real world events in
order to understand these events and devise policy solutions
To Learn To Think Like An Economist
What do Economists Study?
• ‘Economic’ variables and behavior -- prices,
employment, production, profits, labor supply,
consumption and savings
• ‘Non Economic’ variables behavior -- marriage,
fertility, crime, discrimination, health, politics and
voting
• Institutions and Social Norms
What is Economics?
• “The study of economies, at both the level of the
individual and the society as a whole” (K/W page 2)
• Economies -- “the system of coordinating society’s
productive activities” (K/W page 2)
– Market economies -- decentralized decision making
coordinated through prices
– Command Economies -- centralized decision making
What is Economics? Alternative Definitions
• The study of the effect of scarcity on society
• The study of how society answers the following
questions:
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What goods and activities will be produced in society
How will the goods be produced
Who will produce the goods
Who gets to consume the goods
Micro versus Macro
• Micro -- study of how individuals make
decisions and interact with others in
society
• Macro -- study of aggregate behavior of
the economy (inflation, unemployment,
growth)
Introduction to Microeconomics
• Introduction implies an ‘overview’ of the issues and
methods used by economists to study how
individuals make decisions and interact with each
other to pursue their self interest.
• Intermediate Micro Theory -- same issues, more
attention to assumptions underlying the analysis
• Graduate Level Micro Theory -- mostly math
Required Text
Microeconomics
By
Krugman and Wells
(Princeton University)
Available Online and in
Bookstore
Be Sure to get
“Homework Advantage”
Overall Course Grade
• 20% First exam (9/19)
• 20% Second exam (10/12)
• 20% Third exam (11/9)
• 30% Final Exam (12/11 -- Monday)
• 10% Homework
Lectures
• Attendance is not required but strongly encouraged
• Prior to each lecture, the PowerPoint slides will be
made available on web. However, the slides are just
bare bone notes.
• Multi-colored pens or pencils will be helpful in
note taking
Why Study Economics?
• This Course is Required
– Business School and Economic Major
– Way to Complete Social Science Requirement
– Parents
• To Understand How the Economy Works
– For the Pure Purpose of Gaining Knowledge
– Personal Gain
– To Better Society
Micro is Fun and Interesting!
But will it be hard?
It Can Be Hard
But how you study can
make a difference !
How to Study Micro
• Do Reading Assignment (once is not always enough)
• On Student CD-ROM
– Go through Student PowerPoint Slides for Review
– Do Student Quiz
• Download Lecture Slides from Web
• Attend Lecture
• Do Graded Homework on ‘Homework Advantage’
• Ask questions in class, email, office hours
• Start a Study Group
Available on Web
http://www.nd.edu/~jwarlick
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Syllabus
PowerPoint Lectures
Handouts and Additional Readings
Study Guides
Contact Information
• Office (245 O’Shaughnessy Hall)
• Office Hours
– By Appointment
• Email: jwarlick@nd.edu
• Telephone: 631-6335
Homework Advantage
http://bfw.brownstone.net/classes/jwmicro
• First Time
– Click ‘Register as Student’ button
– Provide Access Code from ‘Homework Advantage’ Card
– Provide Information (keep record of password and username)
• After First Time
– Login
– Complete Assigned Homework Prior to Deadline
– Click ‘Grade’ button and Exit
Words of Encouragement
“I would add one word for any student beginning economic study
who may be discouraged by the severity of the effort which the
study, as he will find it exemplified here, seems to require of him.
The complicated analyses which economists endeavour to carry
through are not mere gymnastic. They are instruments for the
bettering of human life. The misery and squalor that surround us,
the injurious luxury of some wealthy families, the terrible
uncertainty overshadowing many families of the poor -- these are
evils too plain to ignore. By the knowledge that our science seeks
it is possible they may be restrained. Out of the darkness light! To
search for it is the task, to find it perhaps the prize, which the
‘dismal science of Political Economy’ offers to those who face its
discipline.”
Arthur C. Pigou (1879-1959)
• Previous quote written
in 1928 -- “Economics
of Welfare”
• Professor at Cambridge
• Friend of Keynes
• Pigovian Solution to the
problem of externalities
Assignment for Lecture 2
• Read Chapter 1 of Krugman/Wells
• Next Lecture -- Core Principles