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

2. 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. 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. 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. 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. 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. 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. 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. 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. 10 Questions?

11. 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. 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. 13 B.S.B.A. in Economics Degree requirements Economics courses24 hours Other major requirements18 hours Business Core42 hours Liberal Studies35 hours General Electives 1 hours Total 120 hours

14. 14 B.S. in Economics Degree requirements Major42 hours Minor 18-24 hours Liberal Studies35 hours General Electives 25-19 hours Total 120 hours

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

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

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

18. 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. 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. 20 Fly over the continent... and note the characteristics of the economy as a whole. Macroeconomics is the study of the entire economy.

21. 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. 22 Primarily Microeconomics Economic history adds perspective on contemporary problems such as... De-regulation, Environmental degradation, International trade, Monopoly power, and Welfare reform.

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

24. 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. 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. 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. 27 Capital Human creations used in production Physical capital: structures, tools, equipment, infrastructure Human capital: knowledge and skills

28. 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. 29 Payments for Resources Wages  labor Interest  capital Rent  land Profit  entrepreneur Entrepreneur claims what is left over Profit = Revenue minus cost

30. 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