EC 201H Fall 2001 Economics 201H (Section 5) Introduction to Microeconomics Prof. John Goddeeris Office:106 Marshall Hall Hours:M W 1:00-2:30 and by appointment Phone:

EC 201H Fall 2001 Information about you Name (and what you would like to be called) Class year (Freshman, Sophomore,…) Where are you from? What are you studying (if you know)? Any previous Economics (including high school or AP)?

EC 201H Fall 2001 What is Microeconomics? A Social Science Social: About people and how they interact Science: Develop theories to make predictions, test them against real data What sets Economics apart? Scope and Method

EC 201H Fall 2001 What is Microeconomics? Key concepts: Scarcity and Choice Economics is the study of how society manages its scarce resources Microeconomics starts with the individual –Usually assumes “rational” behavior

EC 201H Fall People face tradeoffs 2.The cost of something is what you give up to get it

EC 201H Fall Rational people think at the margin 4.People respond to incentives

EC 201H Fall Trade can make everyone better off 6.Markets are usually a good way to organize economic activity

EC 201H Fall Governments can sometimes improve market outcomes 8.A country’s standard of living depends on its ability to produce goods and services

EC 201H Fall 2001 In-Class Exercise: Let’s consider replacing the U.S. economic system with one where everyone is paid exactly the same salary. Would you personally favor such a system? Explain. What problems would exist? Are there mechanisms that could be enacted to overcome these problems? Who would benefit from this system? What jobs would be hard to fill?