1. Welcome to ECON 160 Principles of Microeconomics Professor Tontz

2. Instructor Richard Tontz Office: JH 4253 Email: richard.tontz@csun.edu Phone: (818) 677-2433 Office hours: Mon.,Wed. 2:00 – 3:00pm, Tues. 3:15-4:00pm by appointment. Class Website: http://www.csun.edu/~rlt50610/http://www.csun.edu/~rlt50610/

3. Index Card Front-side (lined) ECON 160/TR12:30pm Name & underline what you go by Phone number Email Major/option Hobbies Favorite book Back-side Occupation, if currently working Your expectations 6 years from now Any message you want to give me

4. Instructional Information 9 hour / Week Course of Study Path to Success –Read chapters before Discussion session –Download and review Classnotes & Powerpoints –Discussion sessions: The Conversation –Definitions: Flash Cards –Topical Reviews

5. ECONOMICS Economics is a Science that analyzes how Individuals behave, in a world of Scarcity.

6. Science is Objective or Positive Positive: Describes what is or will be –Objective –Factual –Testable –Descriptive Normative: Describes what should or ought to be –Subjective –Contains a value judgement –Opinion

7. Construction of Theory Abstractions Definitions

8. Definitions: Words to describe reality Children learn words in pairs ( in ) ( out ) ( up ) ( down ) ( left ) ( right ) ( Hot ) ( Cold ) Alternative perspective: The world exists in a continuum

9. Definitions break up the continuum into parts Red Yellow Blue Orange Green Red Orange Yellow Green Blue Indigo Violet

10. Economic Analysis Looks at small degrees of Change Marginal: Additional: One more… Marginal Value: Additional Value of having one more Marginal Revenue: Additional revenue from one more. Marginal Cost: Additional cost of one more

11. Construction of Theory Abstractions Definitions Assumptions Implications Adoption of Theory

12. A Good Is Anything, That an Individual Wants to Have More Of, at Zero Price. Anything : Material or Non-material An individual wants Have More of At Zero Price

13. Resource: Anything that can be used to produce Goods. Land = all its attributes Labor = People Capital = Buildings & Equipment

14. Assumptions Humankind has unlimited wants Our resources are limited Scarcity : Individually, and as a Society, we do not have enough resources to produce all the things we want.

16. Implications of Scarcity Choice: people must choose which goods to acquire. Economic Cost: The Cost of any action, is the personal value of the next highest valued alternative given-up. Competition: We are in a state of competition for the use of resources

17. Forms of Competition in Society Violence, or Threat of Violence Social/Political : competition on the basis of some limited behavior or characteristic Economic/Market: competition based on offering the highest value in exchange.

18. Primary Social Goal = Fairness Violence: not fair. Social political: not fair. Economic: not fair, Life is NOT FAIR !! But, the market offers the broadest and most fair system

19. What Economics Is About Microeconomics: decisions of individuals and firms: what to buy and what to produce. Macroeconomics: the whole economic system and the role of government.

20. Mechanisms of Choice Political: our representatives make choices Economic/market: individuals and firms make choices based on relative prices about what to produce

21. Product Markets FIRMSHOUSEHOLD Resource Markets $'s$'s Revenue $'s Income $'s Goods & Services Goods & Services Resources Inputs Circular Flow Diagram of the Exchange Economy

22. Households: Decisions: What to sell? What to buy? Assume Maximize Utility Firms: Decisions: What inputs to use? What to produce? Assume Maximize Profits. Markets: Factor Markets, Product Markets Role of Money: The medium of exchange

23. Scarcity  Society Choices What to produce? Goal find the mixture of outputs that maximizes society’s value. How to produce? Goal: find the optimal mix of inputs to maximize technical output. For whom to produce? Who will get to consume the goods produced.