Welcome to Econ 1, Winter 2009 Instructor: John Hartman Teaching Assistant: Rosemarie Lavaty

First issue: Crashers 90 students max, due to the nature of this class No additional room in this class Interactive parts to the class Class size should be students for these interactive components

First issue: Crashers Crash list Must be sophomore status or up To be eligible to add this class, you must do all of the following this week 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 No add codes distributed until next week Last year, only 6 students added Enrolled students get priority for seating

Other options for Econ 1 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 My suggestion is for you to write notes minimally Lecture slides will be available on class website

Third issue: How this class will work Remember that this is a small class  Ask questions if things are not clear The syllabus is posted online  See 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?

Ben Bernanke Chair of the Board of Governors of the Federal Reserve System Co-author of your Econ 1 textbook

Textbook for this class Frank/Bernanke (“F/B”) Principles of Microeconomics Brief Edition “Brief” saves you $$$ Good substitutes: 2 nd, 3 rd, or 4 th edition, or Principles of Economics by F/B Published by McGraw-Hill/Irwin

Optional study guide Expected to be available in mid-January Check regularly with bookstore for more information

Office hours and review sessions Office: NH 2028 Office hours Mondays 12:30-1:30 pm Wednesdays 2:15-3:15 pm No formal review sessions Some time will be spent in lectures and sections

Some important dates Three tests, scheduled for: 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 If you do not miss a test: 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 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 We will do various activities throughout the quarter, many interactive 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) Asking an intelligent question Participating in an activity that includes a subset of the class

Extra credit The student with the most extra credit points at the end of the quarter will receive a 5 percentage point boost to grade Others will receive less than 5 percentage points, formula to be determined at the end of the quarter

Today: An introduction to economics What is economics? Money? Finance?

Today: An introduction to economics 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 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) Key word to remember: “choice”

Why do we make the choices that we do? 7 core principles of economics Scarcity Cost-benefit analysis Incentives matter Comparative advantage Increasing opportunity cost Equilibrium Efficiency

Scarcity 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” Good thing We will establish what “highly valued” means

Cost-benefit analysis Cost-benefit analysis: Think marginal Criterion for doing something Marginal benefit should be at least as great as marginal cost

Incentives matter Cost-benefit analysis is important in predicting individual behavior Microeconomics focuses on individual behavior For macroeconomics topics: Wait until Econ 2

Comparative advantage In simple economies: Everyone does best with specialization and trade In more complex economies: ON AVERAGE, everyone does best with specialization and trade 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 Use resources with the lowest opportunity cost first As with cost-benefit analysis, remember to think in terms of marginal

Equilibrium Two types for this class Market equilibrium Nash equilibrium (game theory) No unexploited opportunities for individuals in either type of equilibrium

Efficiency 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 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 Read the syllabus: 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 Read appendix if you think that your graphing skills are weak Try to think like an economist

In the future… 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