Introduction to Microeconomics

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Introduction to Microeconomics

• I. A framework for dealing with scarcity, human
  behavior, and social organization.
• II. Scarcity as a problem
• III. Production possibilities--our first
  economic model
• IV. Specialization--answer, but a challenge
• V. Management vs. market solutions
• VI. The circular flow of economic activity
• VII. Doing economics

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I. Understanding economic news and issues
requires....

• ...a framework. That framework is called
  economics, which is the science that analyzes
  human behavior and social organization as a
  response to scarce resources and unlimited wants.
• TIME OUT! A word about course requirements

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II. Scarcity as a problem

• A. Scarcity as a personal issue. Example?
• B. Scarce resources as a business problem.
• Example?
• C. Scarce resources as a social problem
• What, How, For Whom?
• D. Opportunity COST--whats given up?
• E. So, scarcity implies tradeoffs. Example?

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III. Production possibilities

• A. A word about models, assumptions, theories.
• Start leaving space to fill in details and draw
  some graphs!
• B. Production possibilities with non-increasing
  costs
• C. Production possibilities with increasing
  costs
• D. Society and scarcity some examples of
  tradeoffs.

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IV. Specialization

• Division of labor makes us more productive
• But it also creates a challenge--how do we
  coordinate all of our efforts so as to satisfy
  our wants without wasting resources?

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V. Management vs. Market

• Personal decisions
• Business decisions
• Prices and opportunity costs
• And _____IT HAPPENS!
• So where do we find the management
• solution instead?

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VI. The Circular Flow of Economic Activity

• A. Two major sectors firms and households
• B. Real flows of products and productive
  services.
• C. Money flows in the opposite direction
• D. Markets as decision and interaction points
• E. What have we left out? Oh, lots!
• F. Microeconomics and macroeconomics

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The Circular Flow of Economic Activity
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Time Out! Requirements

• Textbook Real Economics for Real People, by
  Charles L. Ballard
• Coursepack (Mostly) revised notes and old tests
• Communicate with the instructor!
• --Weekly Manifest on the Web
• --Office hours, email, telephone, etc.
• Come to class regularly, and.

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Did Someone Say Tests?

• Eight Quizzes, mostly on Thursdays
• Your two lowest scores are thrown out
• Three Midterm Exams
• Semi-comprehensive final exam, May 2
• (OK, lets get back on the track of economics.
  Next slide.....)