CDAE 254CDAE 254

Intermediate Microeconomics

for Applied Economists

Fall 2007

CDAE 254 - Class 1 Aug. 28

Today:Syllabus -- class requirements and policiesStudent information sheet with “quiz” questions1. Introduction

Next class:1. Introduction

Syllabus

Instructor:

Teaching assistant:

Class time & place:

Office hours:

Textbook: Intermediate Microeconomics and Its Application by Walter Nicholson, Ninth Edition, 2004 amazon.com ebay.com

My teaching strategies:

-- Students are the “customers” and “products”

-- College education is to learn how to learn

-- Every class is different

-- Help is always available

-- We are a community: learn from each other and help each other!

How to get a good grade?

-- Attend every class-- Complete all assignments on time -- Get help when you have a question

How will we study each topic?

(1) Intuitive analysis(2) Graphical analysis (3) Mathematic analysis(4) Applications

Build your own analytical mindBuild your own analytical mind

1. Introduction1. Introduction1.1. Overview of an economy

1.2. Economics and microeconomics

1.3. Economic models & applied economic analysis

1.4. Development of economic models

1.5. Verification of economic models

1.6. Ten principles of economics

1.7. Functions and graphs used in economics

1. Introduction1.1. Overview of an economy 1.1.1. Who are the major players?

1.1.2. What are their relations?

1.2. Economics and microeconomics 1.2.1. What is economics?

-- Study of the allocation of limited resources among alternative end uses.

-- A social science which covers the actions of individuals & groups of individuals in the processes of producing, exchanging and consuming goods and services.

What is economics?What is economics?

Science: Looking for a black cat in a dark room.

Philosophy: looking for a black cat in a dark room where there is no black cat.

Economics: looking for a black cat in a dark room under _______________.

???: looking for a black cat in a dark room where there is no black cat and finding one any way.

1.2. Economics and microeconomics1.2.2. Two major branches of economics:

-- Microeconomics: study of the behavior of individual economic

units & their interactions.

Economic units: Consumers & producers

Interactions: Market interactions

-- Macroeconomics: study of broad

aggregate economic relations.

1.2. Economics and microeconomics1.2.3. Goals of economics:

-- Explanation

-- Prediction

1.2.4. Analytical techniques in economics:

-- Optimization (1) Maximization

(2) Minimization

-- Equilibrium(1) Partial equilibrium

(2) General equilibrium

1.3. Economic models & applied analysis1.3.1. What are economic models?

-- Simple theoretical descriptions that

capture the fundamentals of how the

economy works.

1.3.2. Major elements of an economic model:

-- Assumptions

-- Variables (1) Controllable variables

(2) Uncontrollable variables

-- Parameters

1.3. Economic models & applied analysis1.3.3. Relation between theories & applied

research: -- Theories are developed from real

observations

-- Theories provide guidance for applied studies

-- Applied studies provide tests of the

assumptions & conclusions of theories.