IntroductionAdministrationContacting meAdministrationClass participationAdmissionAdministrative questionsAdministrative remediesGrading - ExamsTextbooksAdministrative DetailsAdministrative DetailsHintsWhat raises grades in Econ 100AGrades in Econ 100A (cont.)Fair WarningsWhy be an economist?Purposes of courseStudents’ Economic ProblemStudents’ Economic ProblemStudents’ Economic ProblemGraphical analysisMathematical AnalysisScience vs. Values Efficiency vs. EquitySecrets 1Secrets 2Secrets 3MarketCompetitive vs. noncompetitive marketsPartial vs. general equilibriumReal vs. nominal pricesGame TheoryPolicy QuestionsTaxes SubsidiesLotteriesFat and Sugar TaxInternetPrice ControlsRent ControlsMinimum WageLiving-Wage LawsAbortionsTradeMonopoliesMagazinesInsurancePollutionPollutionOther ExternalitiesConstrained optimization Optimize an objective function Subject to (s.t.) a constraintCourse OutlineIntroductionAdministrationSubstancePolicy QuestionsAdministration1.who should take this course2.contacting me3.answers to administrative questions4.grading5.textbooks6.schedule7.hintsContacting me• office hours: T 3:30-5:30; Th 4:30-6:30 • by appointment • [email protected]• 642-9591• mail box in 207 Giannini• (do not give GSI’s messages for me – see me directly)AdministrationList serverPlease subscribe:CalMail websitesend email message [email protected] the body being:subscribe econ100aspring2006Class participation• please give me feedback about speed, sound level, technology, …• speaking up in class and sections: comments and questions are always welcome. Along with pop quizzes, active participation will represent 10 percent of your gradeAdmission• Telebears• see Desiree N. [email protected] Evans (first 2 weeks of the term)Administrative questions• ask general administrative questions in class• please review description tab on web siteAdministrative remedies• “I've been sick…” or “My roommate ate my lecture notes” See your GSI• “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 formsGrading - Exams• I will write the exams (with the GSI’s help) and determine question point allocations• GSI’s grade the exam• no make-up exams• we will vote on the number and type of exams• weighting (if we have 2 midterms):• 20% midterm 1• 25% midterm 2• 35% final exam• 10% five problem sets• 10% class and section participation, pop quizzes (or approved research project)Textbooks• Pindyck & Rubinfeld, Microeconomics, 6th Ed.• Optional study guide by Pindyck & Rubinfeld, 6thEd• Wall Street Journal or Business Section of NY TimesAdministrative Details• Discussion Section and GSIs• 16 sections, 2 meetings per week, 8 GSIs• Review lecture material, work problems, go through PSs and midterms• Section participationAdministrative Details• Problem sets• 5 Problem sets (and answers) posted to course website• Approximately one week to complete, graded by your GSI• One can submit as “study group” from same GSI (3 or less can form a study group)Hints• attendance• class/section participation• do extra problems (e.g., from the reader or the web site)• read two textbooksWhat raises grades in Econ 100A• numerical grades on the first 2005 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, +20 points• substantial effect given the mean was 53Fair 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, or both, if you prefer)• good preparation for graduate 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)Purposes of course• to think like an economist: explain and predict• create models• analyze newspaperarticles• solve problems• improve quality of discourse with friends• understand the core principles of self-interest, the public-interest, and incentivesStudents’ Economic ProblemDecisions, DecisionsEnroll in the course, buy the book, attend lecture and discussion, amount of studying Become an econ major, go on to grad school, etc., etc.BenefitsShort-run: improved performance in courseLong-runIncreased lifetime earningsDiscounted to presentExpressed in expected termsSocial benefits (spillovers)Students’ Economic Problem• CostsDirect cost: tuition• $3,200 x ¼ = $800/course → $25/lectureIndirect costopportunity costother courses, work, sleep, TV, all the aboveStudents’ Economic ProblemChoices• Maximize difference between (private) benefits and the (private) cost of spending time on this course• Constrained by 24 hours in a day• Solution: equate marginal benefit and marginal costGraphical analysisGraphical analysisMathematical AnalysisScience 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)Secrets 2there are only three important diagrams, which are constantly being relabeled:• supply-demand• indifference curve-budget line or isoquan-isocost• monopolySecrets 3economics explains everything (Gary Becker):• love = interdependent utility functions• health economics• Sociology• why self-interest -rationality!!Market• market: an exchange mechanism that brings together buyers and sellers to facilitate trade• industry: collection of
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