1IntroductionAdministrationSubstancePolicy QuestionsAdministration1.who should take this course2.contacting me3.answers to administrative questions4.grading5.textbooks6.schedule7.hintsWho should take this course1. requirements: Econ 1 or EEP1 or equivalent2. don't take Econ 1 and Econ 100A simultaneously3. calculus• used, but I primarily rely on verbal, graphical, and algebraic techniques• may be used on exams and HWs• if you like calculus and formal analysis take Econ 101a instead2Contacting me• office hours: after class• by appointment (if you find me in my office, I’m probably willing to talk)• [email protected]• 642-9574• mail box in 207 Giannini• (do not give TA’s messages for me – see me directly)Class participation• please give me feedback about speed, sound level, technology,…• speaking up in class: I expect to be outrageous, so you should feel free to talk back: comments and questions are always welcomeAdmission• Telebears• see Desiree N. [email protected] Evans (first 2 weeks of the term)3Administrative questions• ask general administrative questions in class• see web page (“Course Description”): http://are.berkeley.edu/courses/ECON100AHandoutshttp://are.berkeley.edu/courses/ECON100A• HW’s and answers• lecture notes• figuresAdministrative remedies• “I've been sick…” or “My roommate ate my lecture notes” See your TA• “I'm very sick - I would like an incomplete” • get an incomplete grade requests from either Sproul or Campbell Hall and Dept. of Economics and attach the medical records• have me sign it• “I have a disability”• tell your TA and me• bring me the official UC forms4Grading - HW• I will write HW’s• turn in HW’s to your TA• HW’s are turned in during section meetings• late HW’s are not accepted• TA’s will provide answers on the web site• simple grading: check or check plusGrading - Exams• I will write the exams (with the TA’s help) and determine points• TA’s grade the exam• no make-up exams• we will vote on the number and type of exams• weighting (if we have 2 midterms):• homework 10%• midterms 44% (= 22% x2)• final (cumulative) 40%• lecture problems (6%)Textbooks• Perloff, Microeconomics, 3rdEd.• Other comparable textbooks• Perloff, 2ndEd.• Pindyck-Rubinfeld• Browning-Zupan• Mansfield• More technical: Katz-Rosen, Varian• recommended reader: Mason and Whaples5Scheduleare.berkeley.edu/courses/ECON100A/schedule.htmlnote: good faith estimate onlyHints• attendance• class/section participation• do extra problems (e.g., from the reader or the web site)• read two textbooks• take practice exams at (student resources)www.aw.com/perloffAttendance• most students who do badly are attendance challenged• Romer’s study for intermediate macro at UCB• 40.5% absenteeism• attending all lectures vs. • none was worth 1.4 to 2.5 grade points• half was worth 0.7 to 1.2 grade points• these payoffs control for how conscientiously students do HW’s6How to do well in this course are.berkeley.edu/courses/ECON100A/Exams/results.htmWhat raises grades in Econ 100A• numerical grades on the first 1999 midterm: 8 to 96, mean = 53• attending section had a linear effect on grades• 10% more section session: +1.3 points• all section meetings vs. none: 13 extra points• attending lecture had nonlinear effect• half vs. none: +12 points• all vs. three-quarters: 4 extra pointsGrades in Econ 100A (cont.)• attend all lectures and sections, read everything, and hand in all HW assignments vs. half lectures, half reading, 1 HS: +20 points• substantial effect given the mean was 537Fair Warnings• e-mail policy (no admin. questions)• falling behind• exam policy (no make ups)Why be an economist?• attract members of the opposite sex (or same, if you prefer)• good preparation for grad. studies, law, business• higher earnings• run a business better: Mars Candy Co.• court cases• vote intelligently (minimum wage, flat tax, NAFTA, GATT, rent control, immigration laws, pollution) Point of the course• to think like an economist: explain and predict• create models• analyze newspaper articles• solve problems8Science vs. Values• positive questions:• what is the effect of a quota on the price of cars?• who gains and who loses? • what will happen if…• normative questions:• should we impose a quota?• what is the best policy?Efficiency vs. Equity• biggest pie versus shares of pie• economists concentrates on efficiencySecrets 1• (secret hand shake last class)• the answer to most questions:• in chemistry: it's the electrons and how they are arranged in space• in economics: MB = MC(that is, maximization)9Secrets 2there are only three important diagrams, which are constantly being relabeled:• supply-demand• indifference curve-budget line or isoquant-isocost• monopolySecrets 3economics explains everything (Gary Becker):• love = interdependent utility functions• health economics• sociologyMarket• market: an exchange mechanism that brings together buyers and sellers to facilitate trade• industry: collection of firms that sell the same or closely related products: • an industry is the supply side of the market• lawyers draw a distinction between “industry” and “market”10Competitive vs. noncompetitive markets• perfectly competitive markets: no buyer or seller can have a significant impact on the market price• we start by studying competition• analogy to physics: study the relationship between objects without atmosphere, friction, gravity,... then add complicationsPartial vs. general equilibrium• partial equilibrium: examine a single market or industry (or individual or firm)• general equilibrium: examine several industries at once• macroeconomics asks how government actions and other large-scale phenomena affect all industries at onceReal vs. nominal prices• we use real rather than nominal prices• nominal price is the current price in current dollars• real price or constant dollar price is the price relative to an aggregate measure of prices, the Consumer Price Index (CPI)11Game Theorymeans of analyzing strategic interactions between firms, employers and employees, and other “players”Policy QuestionsTaxes • How does President Bush’s income tax cut proposal differ from that of the Democrats? What effect are they
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