Welcome to ECO 284 Principles of Microeconomics

1. Welcome to ECO 284Principles of Microeconomics Please pick up a copy of the syllabus

2. How to Contact Me • Mr. John D. Eastwood • Office CBA Room 247 • Phone: 523-7353 • Fax: 523-7331 • E-mail: John.Eastwood@nau.edu • Office Hours:Monday, Wednesday and Friday, 10:15 AM – 11:15 AM;Tuesday and Thursday, 1:15 –2:15 PM;also by appointment

3. Prerequisite • Eligible to take MAT 110 or a higher course • If you lack the prerequisite, contact me as soon as possible! • You are requested to drop the class if you lack the prerequisite or an approved waiver.

4. Course Objectives • Topics: • Overview of a market economy; supply and demand; graphical techniques; consumer behavior; production and costs; prices in both product and resource markets; and international economics. • Successful students will learn to analyze economic issues in an objective manner.

5. The Required Text Package • William A. McEachern, Microeconomics: A Contemporary Introduction, Sixth Edition, Thompson -- Southwestern, 2003. • New copies of this text are packaged with a CD-ROM containing a software package, “McEachern Xtra!” and a four-month subscription to the Wall Street Journal. To subscribe, fill in the card and submit it directly to the Wall Street Journal.

6. Announcements & Calendar Start at the college web site http://www.cba.nau.edu/ Follow the links to my name, and then my web page http://www.cba.nau.edu/facstaff/eastwood-j/

7. Graded Work: • Exams are 60% of your grade • Term paper is 16%, • Problem sets are 12%, • Quizzes and in-class work are 12% of your grade • Your grade is computed as a weighted average of your scores – see example

8. Grading Scale • 90% or better earns an “A” • 80% to 89% earns a “B” • 70% to 79% earns a “C” • 60% to 69% earns a “D” • 59% or less earns an “F” • If the average on an exam falls below a C, I may curve that exam.

9. Academic Dishonesty 1. Plagiarism: any attempt to pass off other’s work as your own 2. Cheating: any attempt to gain an unfair, hidden advantage over one’s fellow students 3. Fabrication: any attempt to present information that is not true 4. Fraud: any attempt to deceive an instructor or administrative officer of the university 5. Any attempt to facilitate academic dishonesty Excerpt from the NAU Student Handbook, Appendix G

10. Questions?

11. Why Study Economics? • The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists. – Joan Robinson, 1903-1983

12. Why Not? • Within business colleges, Economics is sometimes referred to as the “Mother Discipline.” • Accounting, Finance, Marketing, and Management are disciplines that apply economic principles. • Many political issues concern Economics.

13. B.S.B.A. in Economics • Degree requirements • Economics courses 24 hours • Other major requirements 18 hours • Business Core 42 hours • Liberal Studies 35 hours • General Electives 1 hours • Total 120 hours

14. B.S. in Economics • Degree requirements • Major 42 hours • Minor 18-24 hours • Liberal Studies 35 hours • General Electives 25-19 hours • Total 120 hours

15. Minor in Economics • Requires 18 credit hours • ECO 284, and ECO 285 + • Four upper-division economics courses

16. Certificate • Business Economics • Requires 15 credit hours • ECO 284, and ECO 285 + • Three upper-division economics courses

17. Other Business Majors • Accounting • Computer Information Systems • Finance • Management • Marketing • B.A. in Liberal Studies • Enterprise in Society Emphasis

18. The Basics of Economics • What is Economics? • A large subject — How do we approach it? • Heilbroner’s analogy: think of the economy as an unexplored continent.

19. Enter the continent on foot... • and study at close range the persons and firms whose activities (when combined) form the economy. • Microeconomics is the study of how consumers, firms, and resource owners interact in individual markets.

20. Fly over the continent... • and note the characteristics of the economy as a whole. • Macroeconomics is the study of the entire economy.

21. A third approach... • It focuses first on how the "economic continent" came to be there in the first place, and on what forces have shaped and continue to shape its landscape. • This approach is known as economic history.

22. Primarily Microeconomics • Economic history adds perspective on contemporary problems such as ... • De-regulation, • Environmental degradation, • International trade, • Monopoly power, and • Welfare reform.

23. History of Economic Thought • The study of how economic ideas and philosophies have evolved

24. What is Economics? • Woody Allen:“ Economics is about money and why it is good," • Heilbroner: “Economics is the process of providing for the material well-being of society.” (too narrow) • “It’s what economists do.” (too broad) • However, because many goods are scarce, society must make choices. • Thus Economics is often defined as the study of how scarce resources are best allocated among competing ends. • Economics is the science of choice — it explores the choices that we make as we cope with scarcity.

25. Resources • Inputs (factors of production) used to produce goods and services • Thus, goods and services are scarce because resources are scarce • Four general categories (CELL) • Capital • Entrepreneurship • Labor • Land

26. Labor • Broad category of human effort – physical and mental • Effort requires time • Labor is scarce because time is limited . . . and cannot be stored.

27. Capital • Human creations used in production • Physical capital: structures, tools, equipment, infrastructure • Human capital: knowledge and skills

28. Land & Entrepreneurial Ability • Land • All natural resources • “Gifts of nature” • Fields, forests, lakes & rivers • Mineral deposits, oil & natural gas fields, etc. • Entrepreneurial Ability • Managerial & organization skills • Risk taking • Imagination

29. Payments for Resources • Wages  labor • Interest  capital • Rent  land • Profit  entrepreneur • Entrepreneur claims what is left over • Profit = Revenue minus cost

30. Goods and Services • Resources can be combined to produce … • Goods --tangible • Services --intangible • Scarce Resources scarce goods & services • Scarce  the quantity desired exceeds the amount available at a zero price • Scarcity Choice • Free goods are those available at a zero price