BEA683 Economics for Managers

Introduction

CRICOS Provider Code: 00586B

BEA683 Policies They have a lovely

No sitting at the back of the lecture theatre policy here.

Administration: About Me

Michael Brooks Office: Room 405, Business Building Phone: 2286 Hours: After Lecture/ Appointment - office hour: Friday 9.00 am NB I will be changing buildings some time during the semester. I will let

you what the new details are when they come to hand.

Family name

Just in Time Teaching (JiTT)

You read about a topic before its discussed in class

Complete and submit questions

I will use your answers to help formulate what I will discuss in lecture/workshop

Representative Week Time Activity

Week t-1 You read the chapter(s) on topic X

Week t You submit your JiTT

During week (t) Attend the lecture/workshop on topic X

week (t + 1) Review your understanding of topic X

Read material on the next topic

Submit next JiTT

JiTT 1

Can be found on MYLO

You can discuss the answers with others

You must type your own answers

JiTT assignments

JiTT 1 is due March 2, 9.00 am this coming Monday

Question 1 is submitted via MyLO dropbox -- late answers are not accepted

Questions 2 and 3 are submitted Under the Quizzes icon on MyLO

Each JiTT has two sections

You must submit all three questions on time to get the participation mark

ConcepTests I will devote some time to lecturing

But I expect you to answer and EXPLAIN/DEFEND to others in class.

Nothing clarifies ideas better than explaining them to others No talking: just think

and respond

Tutorials

Begin next week

You can only enrol in the tutorial through MyLO.

Assessment

Assessment task Date due weighting

Task 1: JiTT submissions weekly 10%

Task 2: Test 1 Week 7 15%

Task 3: Group Research Project 4pm, 22 May 15%

Total Internal 40%

Task 4: Final Examination Exam period 100%

Textbooks

Cowen and Tabarrok, Modern Principles of Economics, Second Edition

Gans, Core Economics for Managers

I assume at the outset that

you do not know any economics

By the end of the unit you should have gained a good grounding in the principles of economics and their application to managerial issues

Prospectus

This unit will either be the most challenging or easiest you ever take.

. Why?

It is a unit about thinking like an economist not a unit about economics

Economic Way of Thinking

Thinking like an economist requires the following skills:

1. Being Analytical.

2. Recognizing the model is sequential.

3. Being logical/mathematical.

-We will not use anything beyond grade 10 mathematics.

- However, we use calculus ideas.

the margin

elasticity

slopes at points etc.

Economic Way if Thinking

4. Being intuitive.

- the economic model is made up of parts, but it works together to generate an equilibrium.

- understanding in and out of equilibrium requires an economic intuition.

- endogenous vs. exogenous variables.

Economic Way of Thinking

Economics is: A particular way of thinking about behavior. - people have objectives, and they tend to

choose the best way to achieve them. Economics is NOT: - a set of facts, easy to look up, but hard to

remember.

Economic Way of Thinking

- a way of thinking about problems in business, the market, GDP, almost anything.

- a way of predicting the future.

Economics is about all types of human behaviour at any point in time (past, present and future). Such as 1 Business behavior: Why does Disney charge one price to get in, and nothing for the rides?

Why does every car have a heater, but not air conditioning (except Israel)?

Why are some items not priced? (table and seats at a restaurant, toilets on a plane, etc)

Why do people get paid differently and different amounts?

Why did ship captains receive performance pay for transporting convicts to New South Wales?

2. Legal Behaviour:

- why did the crime rate drop in the early 2000s?

- why did divorce rates increase in the 1970s?

-why cant you sell your children, your kidney, or your student card?

3. Family Behaviour:

why are only children spoiled?

- why do you share in marriage

- what is the value of a housewife?

- why are adultery rates for wives like:

but for husbands:

4. Farm Behaviour:

Why are some farmers sharecroppers?

5. In fact, any other type of behaviour:

why are there so few footballers now kicking 100 goals in an AFL season compared to 30 years ago?

Why are most windows rectangular?

Some seem more economic than others, but

Nature of Economics

Economics, as a discipline, has three characteristics:

1. It is scientific.

- we use models, because we just cant think from scratch all the time.

- the cow on the hill.

- our models are formal, and explicit.

- infamous can-opener joke.

- our models should be testable.

- epi-circles.

A cow starts walking along a path at 9.00 am one morning, and eventually makes its way to the top of the mountain by 6.00 pm the same day. The exhausted cow lays down for the night, but starts out early next morning at 8.30 am and is down at the bottom by 2.00 pm. Is there a spot on the path where the cow was at the same time each day?

A.No B.Yes C.Dont Know D.Impossible to work out

Our models should be testable

Aristotles model

Earth

Sun

AB

Earth

Sun

Epi-circles model Aristotles model

Earth

Sun

AB

Earth

Sun

Epi-circles model

2. It is an art.

- there are good and bad explanations.

-tastes vs. constraints

- a good economist senses what variables matter and what dont.

- price of tea in China.

- a good economist has an intuition about the explanation.

3. It is ultimately, like all science, pure religion.

- in the end we accept much of our model on faith.

- we view all individuals as fundamentally the same.

-everyone behaves according to the model.

Economic Model

So, what is the Economic Model?

- it is a set of assumptions, we call axioms

plus

a set of constraints, leading to conclusions.