Comprehensive Introduction to Economics, Supply, and Demand

Course Administration and Connect Registration

• Laptop Usage Policy: Students are encouraged to use laptops for the designated tasks and assignments within the classroom. They should be closed or angled away when not in use for specific class activities to ensure a clear view of the board. Laptops are to be used strictly for the course at hand, excluding activities like YouTube or work for other classes.

• McGraw-Hill Connect Access:

  • Materials: Registration details are provided in a PDF document found under the Announcements section for Section 12 on the Canvas page.
  • Email Requirement: Students must sign up using their TSC email address rather than personal accounts (e.g., Gmail).
  • Registration Options: After entering an email, users are presented with three options:
    1. Book Code: Enter a code if a physical book was purchased.
    2. Buy Course Code: Purchase access directly online.
    3. Temporary/Trial Access: Provides a full $14$ day period of access to all course materials, including SmartBook readings, homework activities, and online quizzes.
  • Account Setup: Upon hitting continue, users will be prompted to create a profile and set a password.

• Assignment Deadlines:

  • The first set of assignments is due this coming Sunday evening.
  • This typically includes two assignments of approximately $30$ minutes each.
  • These assignments cover the first module of material, compensating for the Tuesday morning schedule.
  • A quiz on supply and demand, specifically covering Chapter 3, is scheduled for Tuesday evening following class instruction.

• Canvas Integration: The course uses a modules-based structure. Hyperlinks for Connect assignments are integrated directly into the Unit 1 Module on Canvas, allowing students to access homework without logging into the Connect website separately. The goal is to have the majority of the semester's assignments populated in advance for those who wish to work ahead.

Attendance and Class Record

• The following individuals were noted, called, or discussed during the attendance session for Section 12:
  • Sofia Lucev, Jeremiah Bird, Tyler Campbell, Nicholas Churchill (Nick), Matias Colina, Sage Cundiff (Sage C.), Nicholas Galatano (Nicholas), Riley Gillis, Brandon Hall, Sydney Hebble (Sydney H.), Maxwell Kalinich, Lauren Ken, Darla Coombs, Micah Lambsbach, Logan Larson, Olivia Lacero, Brian Miranda, Michael Neville, Ria Otsu, Nicholas Ortiz, Colin Pavlovich, Joshua Rothbaum, Anna Schultz, Gavin Spinner (Gavin), Amelia Two, Jameson Thurber, Audrey Webb, Jackson Whittington, Shaquay Williams (Shakai), Brandon Yaspe, Natatus Slater, Sophia Bousseau, and Sydney.

Defining Economics as a Science

• Core Concepts: Economics is fundamentally a science focused on scarcity and the decisions made by society in response to those limitations.

• Primary Definition: Economics is the study of how society allocates its resources in the face of scarcity. This involves making resource decisions regarding goods and services.

• Social Science Perspective: It is a social science that examines how individuals and businesses make decisions. It can be defined as the study of human exchange and production derived from scarce resources.

• The Vitality of Exchange: Human exchange is the "secret sauce" of social interaction that provides observable data for economic science. By observing where and when an exchange of goods or services occurs, we can understand the dynamics of valuation between different parties.

Market Mechanics and the Subjective Theory of Value

• Open Markets: In an open-air or flea market scenario, actors can negotiate prices for goods they own as private property.

• Price Determination: Prices are determined through the interaction of buyer and seller motivations.

  • Buyers: Motivated by economizing, they seek the lowest price possible.
  • Sellers: Driven by the profit motive, they aim to sell items at the highest price possible, often factoring in production costs. However, a seller may sell at a loss if they prioritize liquidating inventory for cash in a specific moment.

• Subjective Valuation during Exchange: An exchange occurs when there is a "dis-equality" of wants at the margin.

  • Example: A buyer and seller negotiate a price for a couch.
  • The buyer is willing to pay up to $200$; the seller is willing to accept as low as $180$.
  • They agree on an exchange price of $190$.
  • Key Observation: At the moment of exchange, the buyer values the couch more than the $190$ surrendered. The seller values the $190$ more than the couch surrendered. Both parties believe they are better off.

The Law of Demand and the Law of Supply

• The Law of Demand: This law states that, ceteris paribus (all else being constant), there is an inverse relationship between the price of an item and the quantity demanded ($Q_D$).

  • As Price ($P$) increases ($P ↑$), $Q_D$ decreases ($Q_D ↓$).
  • As Price ($P$) decreases ($P ↓$), $Q_D$ increases ($Q_D ↑$).

• The Law of Supply: This law states that, ceteris paribus, there is a direct relationship between the price of an item and the quantity supplied ($Q_S$) by producers.

  • As Price ($P$) increases ($P ↑$), $Q_S$ increases ($Q_S ↑$), driven by revenue opportunities.
  • As Price ($P$) decreases ($P ↓$), $Q_S$ decreases ($Q_S ↓$).

Scientific Method: Ceteris Paribus in Economic Analysis

• Definition: Ceteris paribus (CP) translates to "all else constant."

• Statistical Analogy: In medical or biological sciences, experiments use a control group and a treatment group to isolate effects.

  • The Control Group receives a placebo (e.g., a sugar pill).
  • The Treatment Group receives the actual medicine.
  • By keeping all other factors constant between groups, scientists can determine if the treatment actually caused the observed effect.

• Application in Economics: To understand the effect of a price change (the "treatment") on quantity (the outcome), all other variables in the market must be assumed constant. Economics is a marginal science concerned with the impact of specific, marginal changes.

Price Theory: Predicting Market Outcomes

• Shifts in Demand:

  • If Demand increases ($D ↑$), ceteris paribus, the market price increases ($P^* ↑$) and the quantity exchanged increases ($Q^* ↑$).
  • If Demand decreases ($D ↓$), ceteris paribus, the market price decreases ($P^* ↓$) and the quantity exchanged decreases ($Q^* ↓$).
  • Example: If multiple buyers are bidding on a single couch at a market, the price will rise.

• Shifts in Supply:

  • If Supply increases ($S ↑$), ceteris paribus, the market price decreases ($P^* ↓$) and the quantity exchanged increases ($Q^* ↑$).
  • If Supply decreases ($S ↓$), ceteris paribus, the market price increases ($P^* ↑$) and the quantity exchanged decreases ($Q^* ↓$).
  • Example: If a buyer notices a second, similar couch available elsewhere, the price of the first couch faces downward pressure.

• Theoretical Approach: While economics uses graphs (where the demand curve is downward sloping and the supply curve is upward sloping), it is primarily a deductive, logical social science. Logic should precede graphical representation.

Questions & Discussion

• Question: What is the password for the Connect link if I already created an account?

  • Response: You create your own password when registering your profile. If you have a physical book, you should use the book code. Otherwise, use the purchase or trial options after entering your TSC email.

• Question: Is the McGraw-Hill integration available directly on Canvas via the blue icon?

  • Response: Yes, that integration link likely appeared after the first Tuesday and provides access to the course materials through the Canvas LMS.

• Question: Where do I find the classroom for my next class? (Student entering late looking for MGM 11:30).

  • Response: The room is located to the right after exiting the current building outdoors and making a left toward the larger building.