Econ1001

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ECON1001A,B
Introduction I

1

Course requirements
• • • • • 3-hour lectures each week One-hour tutorial each week; schedule to be announced soon 3 assignments plus weekly online exercises one mid term test (time/date non-negotiable) No make-ups for mid term or final exam • Whoever fails to attend a mid term with approved reasons will have the share of the mid term moved to the final exam

• Final exam is cumulative

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Requirements
Assessment Mid term (Oct 25, 2012, Thursday evening) Final exam (To be announced) Tutorial participation Assignments (online & written) Weight 20% 60% 4% 16%

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Introduction
• Macroeconomics versus Microeconomics • Tentative Nature of Economic Knowledge • The Assumption of “Economic Man”

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What is Economics?
• Studies inflation, unemployment, business cycle, economic growth, income inequality • Studies how a consumer’s decisions, a firm’s decisions, and a laborer’s decisions, etc. • Economics is the studies of how economy functions — macroeconomics versus microeconomics • Microeconomics provides foundation for us to understand macroeconomics • Note the tentative nature of economic knowledge

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What is Economics?
• On Oct 4, 2008, Alan Greenspan explained to the Congress what had gone wrong with the financial markets over the past year. • “In other words,” a house representative said, “you found that your view of the world, your ideology, was not right. It was not working.” • “Precisely,” replied Greenspan. ‘That’s precisely the reason I was shocked, because I had been going for forty years or more with very considerable evidence that it was working exceptionally well.” • Bottom line: we should treat our economic knowledge as tentative; should be wary of its limitation

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The Assumption of Economic Man
• In everyday life, the individual cares more about himself/herself than about others. • Adam Smith (17231790) in his Wealth of Nations (1776) used “self-love” to describe this propensity. 7...
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