EconS 305 - Introduction · 6 No Assignment Collected Eric Dunaway (WSU) EconS 305 ... Chapter 2 in...

EconS 305 - Introduction

Eric Dunaway

Washington State University

[email protected]

August 24, 2015

Eric Dunaway (WSU) EconS 305 - Lecture 1 August 24, 2015 1 / 27

Introduction

Welcome to EconS 305Intermediate Microeconomics without Calculus!


Introduction

Why study Microeconomics?

Micro is the study of economics at the individual level. It focuses onhow people interract with �rms, the government, and other people.

Not only do we study how people make their choices, but we also studywhy.


From SMBC (www.smbc-comics.com)


Who am I?

Eric Dunaway, 3rd Year Ph.D. Student in Economics.

My specialty is in Microeconomic Theory, especially Game Theoryand Externalities.

I�m from Spokane, WA, and a graduate from Eastern WashingtonUniversity.


Who are you?

Introductions

A little bit of surveying.


Book

Microeconomics, by J. Perlo¤

I�m using the 7th edition, but any previous edition is �ne. I won�t betaking any problems out of the book.

Don�t get the software package. We won�t be using it.

If you are limited on money for books, Dr. Ray Batina has a freebook on his webpage that covers all of these topics and is also anacceptable substitute.

All of my suggested readings will be from Perlo¤�s book.Information is in the syllabus.


Website

I will be uploading all class materials to my personal website.

www.dunawayecon.com

I also have blackboard set up for this class, and will upload everythingexcept the class notes to it.

You�ll be able to access all of the solutions and extra materials fromthere.


Grading

7 Homework Sets (30%)

3 Quizzes (15%)

2 Exams (30%)

Final (25%)


Grading Scale

If your �nal grade is over 50%, you will pass this course.

If your �nal grade is over 90%, you will be guaranteed an A in thiscourse.

At the end of the class, I will determine the grade breakpoints basedon how the �nal grades are distributed.


Homework

I assign 1-3 homework problems at the end of almost every class.

The idea is that these homework assignments take about 30 minutesto complete.

Work together!

Every other Friday, I will roll a dice and collect a random assignmentfrom those assigned in the previous two weeks.


Homework

Number Outcome1 Assignment 12 Assignment 23 Assignment 34 Assignment 45 Assignment 56 No Assignment Collected


Exam 1

A quick note about our �rst exam.

I have scheduled it for the beginning of October, but the date is listedas tentative.My wife and I are expecting a child that is due around that time.My goal is to have the exam proctored on the day that I miss. Thus,that exam day could move forward or backward if it is feasible.I will give as much notice as possible.


Questions

Questions?


Expectations

The primary goal for this class is to build an understanding ofeconomic theory.

There are some quantitative skills needed in order to do this.

That being said, this is not a math class.

There are only two math techniques needed for this class that may bedi¢ cult for the non-quantitatively inclined.

I want to go over them today.


Math

Systems of two equations and two unknowns.

Consider the following two equations

3x + 2y = 5

9x = 6y + 2

There are two techniques to solve for both x and y .


Math

First, we can solve the �rst equation for x (or y)

3x + 2y|{z}�2y

= 5|{z}�2y

3x|{z}/3

= 5� 2y| {z }/3

x =5� 2y3

Then, we substitute that into the second equation.


Math

The second equation

9x = 6y + 2

9�5� 2y3

�= 6y + 2

15� 6y| {z }+6y�2

= 6y + 2| {z }+6y�2

13|{z}/12

= 12y|{z}/12

y =1312

We can substitute this back into x to get

x =5� 2y3

=5� 2

� 1312

�3

=1718


Math

Another way to get the same answer, we can rearrange the equationso they are like this (I subtracted 6y from both sides of the secondequation)

3x + 2y = 5

9x � 6y = 2

Multiply both sides of the �rst equation by 3

9x + 6y = 15

9x � 6y = 2

Note now that one equation has +6y and the other has �6y . Wecan use that to our advantage by adding the two equations together.

9x + 6y + 9x � 6y = 15+ 2

18x = 17

x =1718


Math

This is a quick way to �nd the answer for one of the variables.

Most of the time, I�ll be giving you systems of equations where you cando this.

Let�s talk about the second technique.


Math

We will use the power rule quite a bit. It�s a way to convert from"Totals" to "Marginals"

Start with a function

f (x) = x3 + x2 + 4

We can apply the power rule to f (x) in two steps. To do this, �rst,we multiply every term that has an x in it by its exponent. If a termdoesn�t have an x in it, we delete it (Same thing as multiplying it by0).

3x3 + 2x2


Math

Second, we decrease each of the exponents attached to x by 1

fx (x) = 3x2 + 2x

And we�re done! This is the power rule transformation of the abovefunction.


Math

We can apply the power rule to functions with many variables. It�simportant, however, to know which variable you are using whenapplying the power rule (you can only do it for one). Consider thisfunction.

f (x , y) = x2y + 2x3

If I take the power rule for x , I treat y like it�s a constant (think of itas just a number).

fx (x , y) = 2xy + 6x2

If I take the power rule for y , I treat x like it�s a constant

fy (x , y) = x2y0 = x2

(remember that anything raised to the 0 power is equal to 1)


Math

I may teach you one or two more math tricks throughout this course,but for the most part, this is as complicated as it is going to get.

If anyone needs additional math assistance, I am happy to help eitherduring my o¢ ce hours or by appointment.

This isn�t a math class, and I don�t want anyone to feel discouraged ifthey are not very strong in math. I�m glad to help.


Preview for Wednesday

Supply and Demand

Chapter 2 in Perlo¤.

What factors in�uence the equilibrium price and quantity of goodsbought and sold in the market?


Assignment 1 (1 of 2)

1. Solve the following systems of equations. (Use any method you like)

a.

q = 10� 2pq = 1+ p

b.

x + 4y = 3

3y = 2x + 5

c.

2x + 3y = 7

5x � 3y = 14


Assignment 2 (2 of 2)

2. Apply the power rule to the following functions with respect to both xand y

a.f (x , y) = x2y3 + 2x + 3y4

b.f (x , y) = x2 + y2

c.f (x , y) = x0.5y0.5


EconS 305 - Introduction · 6 No Assignment Collected Eric Dunaway (WSU) EconS 305 ... Chapter 2 in...

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