Introduction page 1
Principles of Microeconomics
Economics 103
Principles of Microeconomics
Betty Johnson
Summer 2017
http://web.uvic.ca/~bettyj/103
Introduction page 2
Principles of Microeconomics
Today’s Class:
■ Brief introduction to course material
■ Administrative details
Introduction page 3
Principles of Microeconomics
What is Microeconomics?
It is the study of decision-making at the
level of the individual person, household or
firm and the societal outcomes that arise
from those decisions.
►Decision-makers are referred to as “economic agents.”
Introduction page 4
Principles of Microeconomics
Markets
The interactions between economic agents occur in the
context of markets.
Markets determine the prices and quantities of goods
produced and consumed in our economy.
The key components of market operations: supply and
demand.
Markets are a vital part of modern society.
Introduction page 5
Principles of Microeconomics
Under certain conditions, markets also do a fair
job of allocating scarce resources across
competing uses.
We will explore what are those “certain
conditions” and whether such conditions generally
hold.
Will we achieve market success or market failure?
Introduction page 6
Principles of Microeconomics
Microeconomics is about more than just “traditional”
markets. (i.e. markets where money changes hands.)
Many important societal outcomes arise from interactions
that occur outside traditional markets:
Examples:
-
Environmental outcomes
Marriage, divorce, population growth.
Criminal behaviour
War
Introduction page 7
Principles of Microeconomics
The basic principle of microeconomics can also be
used to examine “non-market” interactions.
Principles can:
(1) provide a framework for thinking about all types of
decisions.
(2) help us understand many important determinants
of societal well-being, even if no traditional market
is involved.
Introduction page 8
Principles of Microeconomics
Public Policy Design
Microeconomics has a hand in designing public policy
When markets do not perform adequately, policy can be
used to improve societal outcomes.
Another key objective of microeconomics is to
understand how public policy can improve societal
outcomes in the case of market failures.
Introduction page 9
Principles of Microeconomics
Microeconomics versus Macroeconomics
Macroeconomics is the study of aggregate measures of
market activity.
- GNP
- Inflation rates
- Unemployment
- Growth
- Exchange rates
Introduction page 10
Principles of Microeconomics
Since all macroeconomics variables are ultimately
derived from microeconomic behaviour, you must have a
good understanding of microeconomics.
A large amount of macroeconomic research presently
attempts to explain economic-wide phenomena as a
consequence of micro-level interactions among economic
agents.
Microeconomics
Microeconomic principles are a valuable tool.
Introduction page 11
Principles of Microeconomics
Administrative Details
All course information is or will be available on the
website:
http://web.uvic.ca/~bettyj/103
Introduction page 12
Principles of Microeconomics
Materials on the website include:
-
Course outline
List of topics to be covered
Grading information
Copies of lecture notes
Exam information
Extra readings
Check the website regularly.
Please report any broken links ASAP!
Introduction page 13
Principles of Microeconomics
Labs:
Three midterms:
Final (cumulative):
20%
45%.
35%.
Introduction page 14
Principles of Microeconomics
How to Succeed:
1)
2)
3)
4)
5)
Come to lecture
Read relevant parts of textbook.
Use the study guide
Go to labs.
Ask for help as soon as you need it.
- Lab TA is your primary source
- the Econ help centre is closed this summer
- me (office BEC 324)