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Lecture 1 03_31-3

by: Annie Wu

Lecture 1 03_31-3 ECON 200

Marketplace > Economcs > ECON 200 > Lecture 1 03_31 3
Annie Wu


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This 41 page Class Notes was uploaded by Annie Wu on Monday May 4, 2015. The Class Notes belongs to ECON 200 at a university taught by Knox in . Since its upload, it has received 42 views.


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Date Created: 05/04/15
Econ 200 Principles of Microeconomics Instructor Melissa Knox knoxmuwedu Outline March 31 2015 1 What is economics Economic models Syllabus and administrative details Using graphs Tradeoffs in production SnrpFDN What Is Economics People make choices as they try to attain their goals Choices are necessary because we live in a world of scarcity Scarcity A situation in which unlimited wants exceed the limited resources available to fulfill those wants Economics is the study of these choices Economists study these choices using economic models simplified versions of reality used to analyze realworld economic situations Typical Economics Questions We will learn how to answer questions like these How are the prices of goods and services determined Why does government control the prices of some goods and services and What are the effects of those controls But you can also use economics to answer questions like Why do people have so many or so few children How do people choose between hours spent working and hours spent relaxing Three Key Ideas Idea 1 People Are Rational Rational Using all available information to achieve your goals Rational consumers and firms weigh the benefits and costs of each action and try to make the best decision possible Example Microsoft doesn t randomly choose the price of its Windows software it chooses the prices that it thinks Will be most profitable Three Key Ideas Idea 2 People Respond to Economic Incentives Example Changes in several factors have resulted in increased obesity in Americans over the last couple of decades including Decreases in the price of fast food relative to healthful food Increased availability of health care and insurance protecting people against the consequences of their actions Three Key Ideas Lt t E e Hit it t H4 14 t Wart I I t at t ii iW iii vii H gm 91MMW ME M UH rtMali Hg 39 Should you watch an extra hour of TV or study instead What are the benefits of an extra hour of TV What are the costs ie the benefits of studying instead r T i 5 i WT T 19 if r i 7 T T if i 7 i E WT39V 7 1 i 7 f 1 if 77 if f if i it g y39 if 7 if y39 if 7 j fig ji U i it r H guy i a i t it UL a i H tumor u Jr it Economic Models Building an economic model often follows these steps 1 Decide on the to use in developing the model 2 Formulate a testable 3 Use economic m t 4 3e a if it fails to explain the economic data well UH lt xv lt i 7 7 4L i Vquot i 7 quot359 MD E 7 f i W U H u H gm m U J H JM H gun Uh Huh u M w H The Scientific Nature of Economics When analyzing human behavior we can perform rt7 t t i 39t andor LI AL7 7 7 A 7i 77 AL 7 7 l AL AL l7 rm Hill A it ll llll ii A Cquotquot lll w ll lei We try to mimic natural scientists but people are complicated Ex Should Medical School Be Free Forecasts indicate a significant shortage of doctors especially primary care physicians by 2020 Would more people become primary care physicians if medical school were free And if so would it be worth the cost Economic models can find answers to the positive aspects of this debate Which of the following questions can be answered using normative economic reasoning a If the college offers free parking will more students drive to campus b If the college provided more financial aid would more students go to college c If the college hires better qualified instructors will more students attend d Should the college charge lower tuition to smarter students Microeconomics and Macroeconomics ii iii ii i ii i U H i ii i Mi 4L JL 77 4L iii iiii i ii iii ii i ii Mi i EM nJii H11 7 1 JL JLHJL i 4L JL 2 1 i i in i 1 o i ii iii ii Wei m swim ii i ii iii iii i ii iiii iiUii 4 ii JL WV 4L ii V i i i 1 i i r r on i wig i ii i ii oi Lil iiiiii iii H M ii wei1iMi2 i w M ii iiiii iiiii ii iiii iwu Qiii iiU iiUiin Syllabus and Administrative Details Class website httpscanvasuweducourses964568 should access MyEconLab from here Check website for Full syllabus all course announcements TA information daily reading assignments Check MyEconLab for Weekly homework assignments including one due tomorrow but I am making this optional Class recordings also available via panopto Syllabus and Administrative Details Melissa Knox lnbw 4 Settings toqmll Help Courses 39 Grades Cariendal g gt ECON 200A E09 200 A Course Status Sprmg 2015 Home ECON 200 A Introduction To I Edit a v a Unpublish 6 Published MyLab and Mastering C Choose Home Page Welcome to Econ 200A Assume all information on this site is tentative until the Assi nments first da of class Email me it ou have an uestions g y y y q tg View Course Stream Grades Pages Instructor 0 Course Setup Checklist Syllabus Melissa Knox 393 New Announcement UW Libraries knoxmguwedu UW 40 Grade Scale D View Course Analytics httptacultywashingtonedurknoxm r3 Chat 39 Savery 339 COMIDQ View Calendar OH Weds 122 or by appointment I 39 Chapter 1 lmcludmg Appendix Ch 21 l lhrquot 1 Article Response gt Form 4 ChaDtet 22 23 Please look through this website to find all important content and announcements Syllabus and Administrative Details Syllabus details Homework 15 due every Monday at midnight Writing Assignments 12 3 assignments Class Participation 8 Midterm Exam 30 May 5 in class Final Exam 35 June 9 430620 Syllabus and Administrative Details Homework Do online in MyEoonLab Due every Monday at midnight based on work from previous week Extra assignmentdue Friday April 3 but notgraded No late assignments but lowest score will be dropped Get two chances score is best of two Syllabus and Administrative Details Melissa Knox iviitm 4 2 39ncwn Hm l OLA 554 v ECON 200 A a ECON 200 A Spring 2015 AiWAYS lFARle Tools Diagnostics Grade Sync Home MyLab and Mastering Assignments MYEcon 3 b Grades MyEconLab is a series of online courses that accompany Pearson39s textbooks in economics MyEconLab engages Pages students in active learning it39s modular selfpaced accessible anywhere with Web access and adaptable to eac student39s learning styleand instructors can easily customize MyEconLab to better meet their students needs Syllabus uw Libraries Student links Instructor links UW 40 Grade Scale MyEconLab All Assngnments MyEconLab Assngnment Manager Chat Access all of your MyEconLab assignments Create and manage all MyEconLab and ensure your grades are properly assignments recorded MyEconLab Study Plan Manager MyEconLab Course Home Manage MyEconLab study plan coverage and Access your MyEconLab course for additional mastery settings content and assignments MyEconLab Gradebook Review manage and analyze student MyEconLab results Syllabus and Administrative Details Courses Hello Melissa Knox Account Help 8 Support Sign Out ECON 200A SPRING 2015 Econ quotl39P 514quot 0 El 5 Course Home modifvo ECON 200A SPRING 2015 March April Sun Mon Tue Wed Thu Fri Sat 70 3o 31 1 2 3 1 o I I 6 My Upcoming Assignments View All Assignments In Class Learning Instructor View 39 Next Due Ask students questions during class to assess their Apr 04 Get Start QU39Z understanding in real time with LgaLnLnaLatalytjgs 0 Apr 07 Homework 1 Ch1Ch2 03 17 l Next Study Plan section 01 Tutorial Examples for Students DAYS HOURS My Results Overall Score No Results Yet 0 Announcements View All Announcements Course Timeline 1000quot 80 Welcome to MyEconLab Before you start run the gnoyvuser Cibgcjg to confirm that you have m N0 955 9 9m5 SUDTWHEG Ve39 the plugins and players you need to view questions and multimedla m 00 ags39gned Work to quot33950 Your 5C0 View More gtgt rnnfnnf in unur rnnrcn A Syllabus and Administrative Details Exams One midterm and one final No early exams No graphing calculators or iphones please purchase or borrow a simple calculator Syllabus and Administrative Details Class Participation We will do inclass exercises beginning 0402 Please bring device smart phone tablet laptop to every class see me if this is an issue Please sign up for Learning Catalytics and sign in during every class Can miss 20 and still receive perfect grade no makeups Syllabus and Administrative Details Courses Hello Melissa Knox Account Help 8 Support Sign Out ECON 200A SPRING 2015 Econ quotl39P 514quot 0 El 5 Course Home modifvo ECON 200A SPRING 2015 March April Sun Mon Tue Wed Thu Fri Sat 70 3o 31 1 2 3 1 o I I 6 My Upcoming Assignments View All Assignments In Class Learning Instructor View Ask students questions during cl Next Due Apr 04 Get Start QU39Z understanding in real time wi LgaLnLnaLatglytjgs 0 Apr 07 Homework 1 Ch1Ch2 03 17 l Next Study Plan section 01 Tutorial Examples for Students DAYS HOURS My Results Overall Score No Results Yet 0 Announcements View All Announcements Course Timeline 1000quot 80 Welcome to MyEconLab Before you start run the gnoyvuser Cibgcjg to confirm that you have m N0 955 9quot 9m5 SUDTWHEG V9 the plugins and players you need to view questions and multimedla m 00 ags39gned Work to quot33950 Your 5C0 View More gtgt rnnfnnf in unur rnnrcn A Syllabus and Administrative Details 1 39 a1 39 Melissa Knox l Unwersitv 0t Washington Seattle l Logout Courses minim twp My Courses gt ECON 200A SPRING 2015 Create module Q Copy a module quot Settingg amp Students 39 Groups E Gradebook Search 1 Module 3 Type C Date Results SelfPaced 20150331 O O 0 Lecture 1 Test Showing 1 to 1 of 1 entries ALWAYS LEARNING H912 l Suggort l Legal I Contact us Copyright 2015 Pearson or its a iliates All rights reserved Syllabus and Administrative Details Academic Integrity Academic integrity is the cornerstone of the Departments rules for student conduct and evaluation of student learning Students accused of academic misconduct will be referred directly to the Office of Community Standards and Student Conduct for disciplinary action pursuant to the Student Conduct Code and if found guilty will be subject to sanctions Sanctions range from a disciplinary warning to academic probation to immediate dismissal for the Department and the University depending on the seriousness of the misconduct Dismissal can be and has been applied even for first offenses Moreover a grade of zero can be assigned by the instructor for the course Syllabus and Administrative Details Academic Integrity No graphing calculators or internetcapable devices during exams All notes and books put away during exams better yet leave them at home No hats No bathroom breaks must leave phone with us in case of emergency All of my exams are closed notes and closed neighbor Syllabus and Administrative Details Courtesy It is distracting to me and to your fellow students when you are online or texting during class Please keep your devices off unless we are doing an exercise or you are taking notes And I encourage you to take notes by hand studies show you learn better that way Syllabus and Administrative Details Add codes Seats in this room are very limited Please email me with your name student id and the section you want and I will give a few codes on a first come first served basis Graphs of Two Variables Fringe uarritg pullers liter plaza pizzas per tirealt P ir lls ENE 54 H 55 3913 m 12 iii m melami lllar The price of pizza is on the WW vertical axis or yaxis and the quantity of pizza sold per week along the horizontal axis or x I 3 axis L 5 33533 l E 5393 55 El 5 ET 3 5 iurll tilty39 pizzas per week Calculating the Slope of a Line F E E E E E E E E E E E E E E E E E dollars a a a 5 E E per pizza 1 E Because the slope of a straight line is constant we can use any two i E E E E E E points in the figure to H euwe calculate the slope of I i 5o 55 so as 11 1 5 Calculating the Slope of a Line pizzas per week Sb 6 Change in value on the vertical axis Rise p Change in value on the horizontal axis Ax Run Calculating the Slope of a Line continued For example when the price of pizza decreases from 14 to 12 the quantity of pizza demanded increases from 55 per week to 65 per week F r r 1 1 dwellers merging 1395 all n 3955 1 H 117 5 5 5 Eeu we l l l l l EU 55 EDquot 55 Tf39 1 5 Calculating the Slope of a Line I a Quantity plazas per week Change in value on the vertical axis Ay Rise Slope Change in value on the horizontal axis Ax Run Slope APrlce ofplzza 26912 5914 2 O2 AQuantlty of plzza 65 55 10 Positive and Negative Relationships In a positive relationship between two economic variables as one variable increases the other variable also increases Eonsuuimitlon 1 LEE 5min ing dollars In a negative relationship as one variable increases the other decreases billions of 1 39 15 i 1 Lilli so El Year EDIE E l 311111 291 Disposable Personal Income billions of dollars l 22 quot11113 111549 11931 Consumption Spending billions of dollars 9345 mat E 1 07329 1 1 123 r quotII I r Ell il quotIElllll lllIlEiljl iii 1 11 atm l i p asalblle pimprial income billions t atware Graphing the Positive Relationship Between Income and Consumption Correlation vs Causation llallum her of Rate at leayee on which tra grass 1 grows 4 Hum bar li ii EE 3933 Nu mbr lawn neer in lirpllaeea liming iLllEE l all mbllenri of i il litli l variable El Problem ll rein2 ea Healing Using graphs to draw conclusions about cause and effect is dangerous In panel a as the number of fires in fireplaces increases the number of leaves on trees falls but the fires don t cause the leaves to fall In panel b as the number of lawn mowers being used increases so does the rate at which grass grows Are Graphs of Economic Relationships Always Straight Lines The relationship between two variables is linear when it can be represented by a straight line E t lt he t39tll gill Hilda ti lll Jill llll l l llllll 7 7D lf 7 f f i ii 77 H M I 7 7 7 7 7 7 7 777 7 77MB Slopes of Nonlinear Curves A nonlinear curve has on millliirno f different slopes at different i l la 1 y 1 EEK We can approximate its slope over a section by m measuring the slope as if that section were linear 350 Between C and D the m slope is greater than EL i a between A and B in Tho olooo of n nonllnoar onnio lo not oonotnnt Lelel4 oon nued Tntal mat f Another way to measure the 5mm slope of a nonlinear curve is Mars to measure the slope of a line that is twat t t t a u Total cost where we want to know the j day 15 Cost E 75 am a 3 4 a 9 Quantity prudu millions per month 1 5 0 ti The alone of a nonlinear turtle is measured by the Inpam tna tangantlina AQuantity 1 The Slope of a Nonlinear Curve Formula for a Percentage Change One important formula is the percentage change which is the change in some economic variable usually from one period to the next expressed as a percentage l t fequotfl t t t f W i i i i 1 L quot39 7 i i f Mrquot 1 f 7 i itL l uiimliglf fMLilMEJ f lrt titf The Area of a Rectangle The area of a rectangle is Area of arectangle BasexHelght equal to its base Price at multiplied by Its height 155 per battle Here total revenue is equal to the quantity of 2 m a 125000 bottles times the price of 200 per bottle or 250000 Demand GUN fur Pepsi 0 1 25 000 Quantity battles per manth Showing a Firm s Total Revenue on a Graph The Area of a Triangle 1 Area of a mangle E gtlt Base gtlt He1ght The area of the FE blueshaded triangle d llm per hittle equals 12 x 25000 x 050 or 6250 15 Demand Eluwe far FEET I 1255 l j Quantity hiltlee per mnntlhl The Area of a Triangle Refer to the graph below What is the absolute value of the slope of this line Price 16 perpi aj 15 2 1E 2 n u n u n u I H n u u H zz39gya gt H 11 I w 2I m w I H g l r ll l39lEl L I curve i 5 55 Eli E95 7quot 7 iuantity39 Five pizzas er week One fifth One There is insufficient information to compute the slope of this line 996 Production Possibilities Frontier Chapter 2 Section1 Households firms and governments continually face decisions about how best to use their resources Economics teaches us tools to help 77 7 g r Wr ltr779a7 m777 fl 7 i ae good tradeoffs El i i 7 77 739 7 7 7 7i 7 7 7 77 7 7 7 7 7 7 7l 7 717 l lll l ll l 39 l l 39 l 7 l r 7 L 7 L Ll77 7 7 Z 7 7 L 7 7 77 7 7ll 77M3l797 Tim 7p 7 g Aklf7 7777 il7774H7 m 7 i f777 t t Ht illicit i ll l JLl 7 777gjrg 7are JUL 77l77 ti ll ll lull till small e l e In Will a i will i it re ll A Production Possibilities Frontier for Tesla Tesla can produce sedans andor SUVs Points on the PPF are attainable for Tesla Points below the curve are inefficient Points above the curve are unattainable with current resources Tesla s Production Choices at Its Fremont Plant Choioe Quantity of Sedans Produced Quantity of SUVs Produced A 80 O 8 60 20 C 40 40 D 20 60 E O 80 ralmmtity f sedans prdul d per clear so Eli lit 2 eat at Quantity t ELM5 procluoed per day Tesla s production possibilities frontier Tesla Can Trade Off Sedans for SUVs To produce 20 more SUVs eg moving from A to B Tesla must produce 20 fewer sedans The 20 fewer sedans is the opportunity cost of producing 20 more SUVs Opportunity cost The highestvalued alternative that must be given up to engage in an activity MDOUJL Choi Testa39s Production Choices at Its Fremont Plant Quantity of Sedans Produced Quantity of SUVs Produced 80 60 4O 20 O 20 40 60 80 Quantity f sedans prdUEEad per clay EU 7 l Eli Emmi of sum Tesla s production possibilities frontier


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