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Welcome to Econ 1, Winter 2009

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

  2. 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 50-80 students for these interactive components

  3. 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

  4. First issue: Crashers • No add codes distributed until next week • Last year, only 6 students added • Enrolled students get priority for seating

  5. 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

  6. Second issue: Note taking • My suggestion is for you to write notes minimally • Lecture slides will be available on class website

  7. 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 http://econ.ucsb.edu/~hartman/ • 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

  8. Who is this?

  9. Ben Bernanke Chair of the Board of Governors of the Federal Reserve System Co-author of your Econ 1 textbook Who is this?

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

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

  12. 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

  13. 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

  14. 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

  15. 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)

  16. 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

  17. 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

  18. Today: An introduction to economics • What is economics? • Money? • Finance?

  19. 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

  20. 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”

  21. 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

  22. 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

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

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

  25. 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

  26. Increasing opportunity cost • Use resources with the lowest opportunity cost first • As with cost-benefit analysis, remember to think in terms of marginal

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

  28. 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

  29. 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

  30. For Wednesday • Read the syllabus: http://econ.ucsb.edu/~hartman/ • 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

  31. 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

  32. See you on Wednesday