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 societys

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:

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

Syllabus
PowerPoint Lectures
Handouts and Additional Readings
Study Guides
 Contact Information
Office (245 OShaughnessy 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