1. Econ 100 Principles of Economics Murat Usman
Lecture 1
February 3

2. Lecture plan Feb 3 2014 Syllabus
Book. Lecture Notes. Study tips. Exams. Grading. Make ups.
People on the waiting list
My course (and book) recommendations
After Econ100: Econ201 and Econ202
A short Introduction: what is economics?
A very short case study: What would you do, if you were …

3. Hala beklemedeyim, ne yapacağım?

4. From: Koç University <robot@ku. edu
From: Koç University Subject: Hala beklemedeyim, ne yapacağım? Date: 31 Jan :07:40 GMT+2 Cc: Reply-To: Sevgili Öğrencilerimiz, Kayıtlar kapandı. Hala beklemedeyseniz bu mesajı dikkatle okumanızı rica ediyorum. İlk sıralardaysanız çıkışlar nedeniyle Add/Drop sırasında girme şansınız olabilir. Değilseniz bir B Planı yapmanız, beklemede olduğunuz ders yerine almayı düşünebileceğiniz dersleri belirlemeniz gerekiyor. Ptesi-Salı günleri programınıza uyan saatlerde verilen ve boş kapasitesi olan derslere girip, Add/Drop için hazırlık yapmanızı tavsiye ediyorum. Add/Drop sırasında başka derse giremezseniz eksik derste kalacaksınız. Güzel bir dönem dileğiyle, İnsan TUNALI İİBF Dekan Yardımcısı
Hala beklemedeyim, ne yapacağım?

5. No capacity increase for Econ 100
We have 6 sections capped at 95 students each
This is a huge course.

6. The book
Economics, 2e. Gregory Mankiw & Mark Taylor 928 pages, 28x22.3cm Shipping Weight: 4.1 pounds Book website: _taylor2/students/stu_title.htm

7. The author
Gregory Mankiw (rhymes with thank you)

8. A common question
Do we have to buy the book?

9. No.

10. Another common question: I am registered in the 9 30 section
Another common question: I am registered in the 9 30 section. Can I come to the section? Answer: No.

11. Now the most important part …

12. Grading Two midterm exams, one final exam.
Midterm #1: Week 6 (+2/-1 week)
Midterm #2: Week 11 (+2/-1 week)
Final Exam: scheduled by the Registrar’s Office. (May 22 to June 2).
MAKE UP exams:
not more difficult than regular exams
must have a valid excuse.
make-up finals scheduled for June 3-4.

13. How is your letter grade computed?
25% Midterm Exam #1. 25% Midterm Exam #2. 40% Final Exam. 10% “Wild Card”. Your best exam gets an added weight of 10%. For example, if you do very well on the final exam its weight will be 50%. 10% Bonus. For class participation and assignments.

14. In class exercise #1: How is my letter grade computed?
25% Midterm Exam # % Midterm Exam # % Final Exam. 75 Bonus: 6 points. B+ needs 81. Will this person receive a B+? Please show your work.

15. In class exercise #1: How is my letter grade computed?
25% Midterm Exam # % Midterm Exam # % Final Exam. 75 ( )x x x75 = Bonus for class participation:. 6 bonus points Total points (out of 100) Letter grade: B+

16. In class exercise #2: My letter grade without wildcard and bonus
25% Midterm Exam # % Midterm Exam # % Final Exam x x x75 = Letter grade: B-

17. Class participation and assignments
10-point BONUS In class experiments and activities Short reading/writing assignments Please bring a pen/pencil and a piece of paper to each class. and Please turn off the phones.

18. 10 points bonus for class participation (not easy!)
Please turn off laptops, tablets, phones, etc
It is not easy but you can do it
Avoid behavior like
always arriving late for class;
keeping steady conversation with neighbors during class,
doing coursework for other classes, etc.
Be attentive, pay attention to the lecture. Ask questions If I ask a question make an attempt to come up with a response …

19. At the risk of being rude… You don’t earn these 10 points by playing candy crush in class.

20. It is not true that “everybody gets an A in Econ 100”
It is not true that “everybody gets an A in Econ 100”. This is an actual quote from a student (who received a D+) To pass you need 50. For an “A” you need

21. Last year (Spring 2013) With a few exceptions, nobody failed
Last year (Spring 2013) With a few exceptions, nobody failed. About 30% received As. The average letter grade was B.

22. Enough about grades

23. Lecture Notes.
Fairly detailed, regularly updated. But no substitute for lectures
Study tips.
Study questions: very important,
then lecture notes,
then the book.
Use the office hours if you need help.
Exams
Multiple choice questions + a few short answer questions- simple math calculations. No essays.

24. After Econ100 Econ201 Microeconomics
Studies the behavior of individual units (consumers and firms); the demand and supply of individual goods and services.
More abstract/mathematical than Econ202
Econ202 Macroeconomics
Studies aggregated indicators such as GDP, unemployment, and inflation, tries to understand how the whole economy functions.
Always in the news, and on TV: economic growth, exports, imports, central bank. Interest rate, current account deficit, inflation, exchange rates, etc.

25. Recommended
ECON.333/MGEC.333    
GAME THEORY AND STRATEGY

26. Also recommended

27. Econ 100: Goals and objectives
Econ100 is one of the very few courses that everyone must take (almost no alternative)
So, I want people to…
Be happy
Learn some economics
Get good grades

28. A 5 minute lecture on “What is economics?”
Now…
A 5 minute lecture on
“What is economics?”

29. Economics is about the allocation of scarce resources.
Example : Your best friend invites you to a open buffet brunch.
Money is no object; you can eat as much as you want for free.
Time is not an obstacle; it is Saturday, you have all afternoon and would enjoy spending it in the company of your friend.
What is the scarce resource here?

30. If there is scarcity then you have to make choices.
The trade-off principle:
When there is scarcity, then having more of one good thing means having less of another.

31. Now something really confusing…
Economics starts with the assumption that people have well- defined objectives/goals and tend to choose the correct way to achieve them. 
More specifically, economics assumes that people are rational!
Which means people follow this simple rule:
Do activity x if and only if B(x) > C(x),
B(x) is the benefit of activity x (to the individual)
C(x) is the cost of activity (to the individual)

32. A very short case study
Now it is your turn

33. You are the general manager of IL JK company
You are the general manager of IL JK company. The company provides extermination services (böcek ilaçlama). There are some administrative personnel who cannot be fired and … 196 workers who do the actual extermination work and can be fired.

34. More information…
The company started 5 years ago. It is owned by three families. The work requires only a low level of skills so that each worker requires only one week of training. Almost all workers have been with the company for 3 to 5 years. The company pays its workers more than the minimum wage. The workers’ wages, including overtime, are between TL 1,500 and 1,900 per month. The minimum wage in 2013 was about 970 TL. The company gives its workers all the benefits required by law.

35. Current situation Until recently, the company was very profitable.
As a result of the continuing recession, however, there has been a big decrease in profits though the company is making profits.

36. The big decision
You will soon have a meeting with the owners and your management team must decide how many workers to lay off. IL JK’s Finance Department has prepared the following forecast of annual profits:

37. Data Number of workers who will continue to be employed
Expected annual profit
in TL, millions
0 (all the workers will be laid off)
Loss of 8
50 (146 workers will be laid off)
Profit of 1
65 (131 workers will be laid off)
Profit of 1.5
100 (96 workers will be laid off)
Profit of 2
144 (52 workers will be laid off)
Profit of 1.6
170 (26 workers will be laid off)
196 (no layoffs)
Profit of 0.4

38. Your recommendation?
I recommend continuing to employ ______ of the 196 workers in the company.
Why? Provide a brief justification for you decision:
_______________________________________

39. Please…
Write your name exactly as it appears on KU records. Make sure that I can read your handwriting. I am interested in the WHY part of your answer.

40. Your recommendation: I recommend continuing to employ ______ of the 196 workers in the company. Why? A brief justification for you decision: ________________ ___________________________________________________

41. End of the lecture