Econ 100

Principles of Economics
Murat Usman

Lecture 1
February 4 / 5
 Lecture plan

• People on the waiting list(?)

• Syllabus
• Book. Lecture Notes. Study tips. Exams. Grading.
• My course (and book) recommendations
• Econ 100 vs Econ 101+102 (followed by Econ 201 + Econ 202)
• A short introduction: What is economics?
• A short case study: What would you do, if you were …
 Waitlist

Both 10 A.M. sections have 112 students.

If you still want to enroll in one of these Econ 100 sections you
need to talk to me at the end of the lecture.
 The book (4e)

Economics, 4e.
Gregory Mankiw & Mark Taylor
 The (main) author

Gregory Mankiw
(last name rhymes with “thank you”)
 A common question

Do I have to buy the book?

No.
Another common question:
I am registered in the M–W 8 30 section. Can I attend another
section?

Answer: No.
Now the most important part …
 Grading
One midterm, one final exam.
 How is your letter grade computed?

40% Midterm Exam.

60% Final Exam.
 (approx) Exam dates

Midterm exam date: week 9 (or end of week 8), first week of April –
right before Spring break! Date to be finalized by the Registrar’s
Office.
Final exam date: scheduled by Registrar’s Office. (Final exam
period is MAY 20 – 31). http://registrar.ku.edu.tr/academic-calendar/
 MAKE UP exams

If you are going to miss an exam you must

• (1) send me an email before the exam explaining why you cannot
attend the exam, AND
• (2) make an appointment to see me and explain why you could not
attend the exam within three work days of the exam.
A make-up exam will be given (within one week after the midterm
date) only for properly documented cases, medical reports,
emergencies involving immediate family members, school
sponsored events, etc.,
If you do not follow these instructions, you will receive a 0 for the
exam that you missed EVEN IF YOU HAVE A WELL DOCUMENTED
LEGITIMATE EXCUSE.
 Bonus points!

10 points bonus for class participation and doing in-class

assignments.
 Class participation and assignments

10-point BONUS
In class experiments and activities
Short reading/writing assignments

Please bring a pen/pencil and a piece of paper to each class.

 10 points bonus for class participation (not easy!)

• DO
– be attentive,
– pay attention to the lecture.
– ask questions.
– make an attempt to come up with a response to my
questions
 10 points bonus for class participation (not easy!)

• DON’T
– Be late for class;
– Chat with neighbors during class,
– Use cell phones tablets laptops
– Do work for other classes.
 And one more time..

Turn off laptops, tablets, phones.

 Bonus points for class participation

• Class Participation Score, CPS.

• Let A denote the number of times recorded as absent.
• If A ≤ 4, CPS = 10.
• For each absence exceeding 4, 2/3 (0.666) points will be
subtracted from 10!
• The formula for CPS when A > 4: 10 – (A – 4)x0.6666.
• The formula implies that if A ≥ 19, CPS = 0.
What about excused absences?
 Bonus points for class participation
The formula for CPS = 10 – (A – 4)x0.6666.

• EA: number of Excused Absences. For most students A > EA.

• Let A > 4,
• If EA ≤ 4 the same formula applies.
• If EA > 4 (and assuming A > 4) the formula applies with 4
replaced by EA.
• Let A > 4 and EA > 4. The formula is CPS = 10 – (A – EA)x0.6666.
 Letter grades

It is not true that “everybody gets an A in Econ 100”.

This is an actual quote from a student (who received a D+)

 Letter grades

To pass you need 50. WITHOUT BONUS!

For an A you need at least 90. (more on this on the next slide!)
For A+ you need a miracle.
Exam score average ≥ 98 + some class participation is necessary (may not be
sufficient!)
Last semester 1 student received A+ out of 340 students.
İlk sınavım 78. A almak için finalden kaç almam lazım?
 Letter grades (with and without bonus points)
LG Exam Exam
Exam average = 0.4xMidterm + 0.6xFinal
AVG AVG +
BONUS
A+ * * * Necessary condition for A+:
A 90 95 Exam AVG ≥ 98 AND class
A- 87 90 participation score ≥ 5.
B+ 83 85
B 80 80
B- 77 77
C+ 73 73
C 70 70
C- 65 65
D+ 60 60 To pass you need exam average score ≥ 50.
D 50 60
GRADING HISTORY
 Fall 2018

18 students (total 324) failed.

17 of these missed at least one exam.
48 % of students received B+ or higher.
Median letter grade: B.
Enough about grades
 Econ 100 website

https://ku.blackboard.com
– syllabus
– lecture notes (posted after class)
– study question (weekly)
– past exams + answers (1 week before the exams)
– information: exam date topics, classroom
– information about my office hours, KOLT tutoring hours
– readings
• Lecture Notes.
– Fairly detailed, regularly updated. But no substitute for lectures

• Study tips.
1. Solve the past exams (to be posted 1 week before exams)
2. Do the study questions: very important,
3. Go over lecture notes,
4. Go to Econ 100 KOLT tutors office hours
5. Come to my office hours. (send me an email a day before for
an appointment)
6. Read the book chapters uploaded on website.
• Exams (fairly similar to past exams)
– Multiple choice questions.
– Exams are not very difficult.
 PS
We will NOT have weekly Problem Sessions.
Information about KOLT tutoring will be announced later in the
week/
After Econ100
CASE students take econ 101 and econ 102 in place of econ 100.

Double major with ECON  You need to take Econ 101 and Econ
102. Then you need to take Econ 201 and Econ 202.

Double major with BA  You need to take Econ 101 and Econ
102. (No need to take any Econ 201 or Econ 202, although
Econ201 is highly recommended.)
 After Econ 100

Econ 101-201 Microeconomics

– Studies the behavior of individual units (consumers and
firms); the demand and supply of individual goods and
services.
– More abstract/mathematical than Econ102-202
– It is a must if you want to learn proper economics
– Highly recommended for anyone who is interested in a
managerial/executive career
 After Econ100

Econ 102-202 Macroeconomics

– Studies aggregated indicators such as GDP, unemployment,
and inflation, tries to understand how the whole economy
functions.
– Always in the news: economic growth, exports, imports,
central bank. Interest rate, current account deficit,
inflation, exchange rates, etc.
 Recommended

ECON.333/MGEC.333    
GAME THEORY AND STRATEGY
Book recommendations
Economics:
The User's Guide:
A Pelican Introduction
Pelican Books 2014
 Econ 100: Goals and objectives

Econ100 is one of the very few courses that everyone must take
(almost no alternative)
 Econ 100: Goals and objectives

I want people to…

1. Be happy
2. Learn some economics
3. Get good grades
 Now…

A 5 minute lecture on
“What is economics?”
Economics is about the allocation of scarce resources.
Example: Scarcity at the open buffet brunch.
Your best friend invites you to a open buffet brunch.
• Money is no object; you can eat as much as you want
for free.
• Time is no problem either; it is Saturday, you have all
afternoon and would enjoy spending it in the company
of your friend.
What is the scarce resource here?
If there is scarcity then you have to make choices.

The trade-off principle:

When there is scarcity, then having more of one good thing
means necessarily having less of another.

Dictionary definition of trade off is “a situation in which you must choose

between or balance two things that are opposite or cannot be had at the
same time”
 Now something really confusing…

Economics starts with the assumption that people have well-

defined objectives/goals and tend to choose the correct way to
achieve them. 
More specifically, economics assumes that people are rational!
Which means people follow this simple rule:
Do activity x if and only if B(x) > C(x),
B(x) is the benefit of activity x (to the individual)
C(x) is the cost of activity (to the individual)
A short case study

Now it is your turn

You are the general manager of IL JK company.
The company provides extermination services (böcek ilaçlama).
There are some administrative personnel who cannot be fired.
There are also 196 workers who do the actual extermination
work and can be fired.
 More information…

The company started 5 years ago. It is owned by three families.

The work requires only a low level of skills. A new worker needs
only one week of training.
Almost all workers have been with the company for 3 to 5 years.
The company pays its workers more than the minimum wage.
The workers’ wages, including overtime, are between TL 2,800
and 3,600 per month.
The minimum wage in 2018 is about 2029 TL. (before tax)
The company gives its workers all the benefits required by law.
 Current situation

Until recently, the company was very profitable.

As a result of the continuing recession, however, there has been

a big decrease in profits though the company is making profits.
 The big decision

You will soon have a meeting with the owners and your
management team must decide how many workers to lay off.

IL JK’s Finance Department has prepared the following forecast

of annual profits:
 Data

Number of workers who will Expected annual profit

continue to be employed in TL, millions
0 (all the workers will be laid off) Loss of 8
50 (146 workers will be laid off) Profit of 1
65 (131 workers will be laid off) Profit of 1.5
100 (96 workers will be laid off) Profit of 2
144 (52 workers will be laid off) Profit of 1.6
170 (26 workers will be laid off) Profit of 1
196 (no layoffs) Profit of 0.4
Your recommendation:
I recommend continuing to employ ______ of the 196 workers
in the company.
Why? A brief justification for you decision: ________________
___________________________________________________
End of the lecture