Introduction

.title[
# Introduction
]
.subtitle[
## Microeconomics for Students of Accounting, Finance, and Digital Applications
]
.author[
### Lyuben Ivanov, PhD
]
.institute[
### Sofia University St Kliment Ohridski
]
.date[
### Oct 2, 2024
]

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  .font200[
<strong>  Why Am I Teaching?</strong>
]
<hr>

---

# The Rewards of Markets

.pull-right-2[
_My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Warren Buffett </span>
]

---

# Giving the Most For the Least

<br>

.pull-right-2[
_If I have to choose one profession in which you give the most for the least it is probably teaching &mdash; if you take it seriously. You have to have the temperament for it to coax, to stimulate, to cajole, to discipline a young mind into good habits. You must have an aptitude._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Lee Kuan Yew </span>
]

---

# Teaching Without Changing

<br>

.pull-right-2[
_You can easily ruin your life trying to change someone else. It’s stupid._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Charlie Munger </span>
]

.pull-right-2[
_The best thing a human being can do is to help another human being know more._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Charlie Munger </span>
]

---

# Opportunity for Creativity

<br>

.pull-right-2[
_Computer programming is an art, because it applies accumulated knowledge to the world, because it requires skill and ingenuity, and especially because it produces objects of beauty. A programmer who subconsciously views himself as an artist will enjoy what he does and will do it better._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Donald Knuth </span>
]

---

# Teaching the Principles of Economics

<br>

.pull-right-2[
_After years of graduate school, nothing reminds an economist of what is truly important and exciting about his field better than teaching the principles course. It is there that we distill our profession's accumulated knowledge and teach our fellow citizens how to better understand the world in which they live._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Gregory Mankiw </span>
]

---

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  .font200[
<strong>  How Is This Course Taught?</strong>
]
<hr>

---

# Teaching Principles

.pull-right-2[
_Simplicity is the ultimate sophistication._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Leonardo da Vinci (presumably) </span>
]

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  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-flask"></i></td>
    <td> </td>
    <td> </td>
    <td> Less but better! </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-flask"></i></td>
    <td> </td>
    <td> </td>
    <td> Stand on the shoulders of giants! </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-flask"></i></td>
    <td> </td>
    <td> </td>
    <td> Systems beat goals any time!</td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-flask"></i></td>
    <td> </td>
    <td> </td>
    <td> The brain is like a muscle!</td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-flask"></i></td>
    <td> </td>
    <td> </td>
    <td> Replace labour with capital!</td>
  </tr>
</table>

---

# The Brain is Like a Muscle

---

# Replace Labour with Capital

[![My Image](07.png)](https://elearn.uni-sofia.bg/course/view.php?id=107586)

Moodle is a **free, web-based learning platform** designed to
provide educators, administrators and learners with a single robust,
secure and integrated system to create **personalised learning**
environments.

---

# Stand On The Shoulders of Giants
<br>
<img src="mankiw.png" width="60%" height="60%" style="display: block; margin: auto;" />

---

# Nicholas Gregory Mankiw: Biography

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    <td></td>
    <td></td>
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    <td style="vertical-align: top">1980</td>
    <td></td>
    <td>BA in Economics <br> Princeton University</td>
  </tr>

<tr style="height: 10px; background-color: transparent;">
    <td></td>
    <td></td>
    <td></td>
  </tr>

<tr style="height: 21px; background-color: transparent;">
    <td style="vertical-align: top">1984</td>
    <td></td>
    <td>PhD in Economics <br> Massachusetts Institute of Technology</td>
  </tr>

<tr style="height: 10px; background-color: transparent;">
    <td></td>
    <td></td>
    <td></td>
  </tr>

<tr style="height: 21px; background-color: transparent;">
    <td style="vertical-align: top">2003&mdash;2005</td>
    <td></td>
    <td>Chairman <br> Council of Economic Advisers</td>
  </tr>

<tr style="height: 10px; background-color: transparent;">
    <td></td>
    <td></td>
    <td></td>
  </tr>

<tr style="height: 21px; background-color: transparent;">
    <td style="vertical-align: top">1987&mdash;present</td>
    <td></td>
    <td>Professor of Economics <br> Harvard University</td>
  </tr>
</table>

---

# The Textbook

.pull-left[
<br>
<img src="textbook.png" width="81%" height="81%" style="display: block; margin: auto;" />
]

.pull-right[
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  <tr style="height: 48px; background-color: transparent;">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-book"></i></td>
    <td> </td>
    <td> </td>
    <td> Successor of a bestselling intermediate textbook </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-lightbulb-o"></i></td>
    <td> </td>
    <td> </td>
    <td> Develops the supply and demand model as fully and consistently as possible </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-lightbulb-o"></i></td>
    <td> </td>
    <td> </td>
    <td> In macroeconomics introduces first the long-run ideas and models </td>
  </tr>
</table>  
]

---

# Assessment Model

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    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td> <strong> Component </strong> </td>
    <td style="text-align: right;"> <strong> Weight(%) </strong> </td>
    <td style="text-align: center;"> <strong> Computer-based </strong> </td>
    <td style="text-align: center;"> <strong> Supervised </strong> </td>
  </tr>
  <tr style="height: 12px; background-color: transparent;">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>Missing Word</td>
    <td style="text-align: right;">0</td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
    <td style="text-align: center;"></td>
  </tr>
  <tr style="background-color: transparent;">
    <td>Practice Tests</td>
    <td style="text-align: right;">0</td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
    <td style="text-align: center;"></td>
  </tr>
  <tr style="background-color: transparent;">
    <td>Weekly Tests</td>
    <td style="text-align: right;">35</td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
  </tr>
  <tr style="height: 12px; background-color: transparent;">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>Midterm exam</td>
    <td style="text-align: right;">32.5</td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
  </tr>
  <tr style="background-color: transparent;">
    <td>Final exam</td>
    <td style="text-align: right;">32.5</td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
    <td style="text-align: center;"><i class="fa fa-check"></i></td>
  </tr>
</table>

---

.pull-right-2[
_I think the one lesson I have learned is that there is no substitute for paying attention._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Diane Sawyer </span>
]
---

# Grading Scale

<table class="none">
  <tr style="height: 48px; background-color: transparent;">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center;"> <strong> Points </strong> </td>
    <td> <strong> Grade </strong> </td>
  </tr>
  <tr style="height: 12px; background-color: transparent;">
    <td></td>
    <td></td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center;"> &ge; 90 </td>
    <td> Excellent (6) </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center;"> &ge; 80 </td>
    <td> Very good (5) </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center;"> &ge; 70 </td>
    <td> Good (4) </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center;"> &ge; 50 </td>
    <td> Average (3) </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center;"> &ge; 0 </td>
    <td> Fail (2) </td>
  </tr>
</table>

---

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  .font200[
<strong>  Why Should You Bother to Learn &nbsp;Economics?</strong>
]
<hr>

---

# Make Better Economic Decisions

<br>
By better understanding:
<table class="none">
  <tr style="background-color: transparent;">
    <td> </td>
    <td><i class="fa fa-lightbulb-o"></i> &nbsp; the markets for goods and services;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td> </td>
    <td><i class="fa fa-lightbulb-o"></i> &nbsp; the markets for factors of production and the financial system;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td> </td>
    <td><i class="fa fa-lightbulb-o"></i> &nbsp; how firms make money and grow.</td>
  </tr>
</table>

YOU should be able to make better decisions with regard to:

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  <tr style="background-color: transparent;">
    <td> </td>
    <td><i class="fa fa-lightbulb-o"></i> &nbsp; how YOU spend your money;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td> </td>
    <td><i class="fa fa-lightbulb-o"></i> &nbsp; YOUR choice of employment;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td> </td>
    <td><i class="fa fa-lightbulb-o"></i> &nbsp; investment of YOUR savings.</td>
  </tr>
</table>

---

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  .font200[
<strong>  Don't Believe Me?</strong>
]
<hr>

---

# Successful Managers

---

# Super Successful Managers

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# How Does Buffett Do It?

<br>

.pull-right-2[
_Investment is most intelligent when it is most businesslike._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Benjamin Graham (1949) </span>
]

.pull-right-2[
_These are the nine most important words ever written about investing._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Warren Buffet </span>
]

---

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  .font200[
<strong>  But You Are Not a Genius?</strong>
]
<hr>

---

# Lifetime Earnings USA (1979-2018)

.font90[
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> <b>Rank</b> </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: center;"> <b>Major</b> </td>
    <td style="text-align: right;"> <b>Median Earnings</b> </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 1 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Chemical Engineering </td>
    <td style="text-align: right;"> $4.0 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 2 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Aerospace Engineering </td>
    <td style="text-align: right;"> $3.8 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 3 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Chemistry </td>
    <td style="text-align: right;"> $3.8 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 4 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Economics </td>
    <td style="text-align: right;"> $3.7 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 5 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Biological Sciences </td>
    <td style="text-align: right;"> $3.7 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 79 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Drama </td>
    <td style="text-align: right;"> $2.0 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 80 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Studio Arts </td>
    <td style="text-align: right;"> $1.9 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 81 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Cosmetology </td>
    <td style="text-align: right;"> $1.9 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 82 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Some College but no degree </td>
    <td style="text-align: right;"> $1.7 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 83 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> Theology </td>
    <td style="text-align: right;"> $1.6 mln </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 84 </td>
    <td> &nbsp; &nbsp; &nbsp;  </td>
    <td> High school </td>
    <td style="text-align: right;"> $1.3 mln </td>
  </tr>
</table>
]

---

# Average Income Economics 2023

<br>
<table class=none>
  <tr style="background-color: transparent;">
    <td> <b>Rank</b> </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: center;"> <b>University</b> </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> <b>Average Income</b> </td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr> 
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 1 </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> Sofia University </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: right;"> 3,663 BGN </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 2 </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> American University in Bulgaria </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: right;"> 3,599 BGN </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 3 </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> HSIF - Sofia </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: right;">  3,301 BGN </td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr> 
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 15 </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> Prof. Dr. Asen Zlatarov University </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: right;">  1,620 BGN </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 16 </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> Southwest University Neofit Rilski </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: right;">  1,615 BGN </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: right;"> 17 </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td> Shumen University </td>
    <td> &nbsp; &nbsp; &nbsp; </td>
    <td style="text-align: right;"> 1,453 BGN </td>
  </tr>
</table>

---

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  .font200[
<strong>  Is It Just About Money?</strong>
]
<hr>

---

# Making Friends with the Eminent Dead

.pull-right-2[
_<br>You are the average of the five people you spend the most time with._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Jim Rohn </span>
]

.pull-right-2[
_If you go through life making friends with the "eminent dead" who had the right 
ideas, I think it will work better for you in life and work better in education._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Charlie Munger </span>
]

---

# Adam Smith (1723-1790)

---

# Adam Smith (1723-1790)

<br>

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  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
   <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><b><i class="fa fa-graduation-cap"></i></b></td>
    <td> </td>
    <td> </td>
    <td>Entered Glasgow University at the age of 14</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
   <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-star"></i></td>
    <td> </td>
    <td> </td>
    <td> Close friend of David Hume; acquaintance of Voltaire and Benjamin Franklin </td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-quote-left"></i></td>
    <td> </td>
    <td> </td>
    <td> <em>There is nobody in Germany to rival Adam Smith!</em> 
    <br>
    <span style="display: block; text-align: right;">Emanuel Kant &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </span>
    </td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-quote-left"></i></td>
    <td> </td>
    <td> </td>
    <td> <em>There is nobody in France who can even be compared to <br>Adam Smith!</em> 
    <br>
    <span style="display: block; text-align: right;">Voltaire &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; </span>
    </td>
  </tr>
</table>

---

# Alfred Marshall (1842-1924)

---

# Alfred Marshall (1842-1924)

<table class="none">
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
   <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><b><i class="fa fa-graduation-cap"></i></b></td>
    <td> </td>
    <td> </td>
    <td>Studied mathematics and physics at Cambridge University</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
   <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><b><i class="fa fa-graduation-cap"></i></b></td>
    <td> </td>
    <td> </td>
    <td>Achieved the rank of Second Wrangler in the 1865 Cambridge Mathematical Tripos</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-quote-left"></i></td>
    <td> </td>
    <td> </td>
    <td> <em>As a scientist he was, within his own field, the best in the world for a hundred years [...]
    His mixed training and divided nature furnished him with the most essential and fundamental of the economist's necessary gifts&mdash;he was conspicuously historian and mathematician, a dealer in the particular and the general, the temporal and the eternal, at the same time.</em> 
    <br>
    <span style="display: block; text-align: right;">J. M. Keynes </span>
    </td>
  </tr>
</table>

---

# John Maynard Keynes (1883-1946)

---

# John Maynard Keynes (1883-1946)

<table class="none">
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
   <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><b><i class="fa fa-graduation-cap"></i></b></td>
    <td> </td>
    <td> </td>
    <td>In 1901, while studying in Eton, he was first in mathematics, first in history and first in the English essay</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
   <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><b><i class="fa fa-graduation-cap"></i></b></td>
    <td> </td>
    <td> </td>
    <td>Studied mathematics and classics at Cambridge University; then lectured Economics there</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-star"></i></td>
    <td> </td>
    <td> </td>
    <td>Worked at top positions for the British government; was among the founders of the World Bank and the International Monetary Fund</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-book"></i></td>
    <td> </td>
    <td> </td>
    <td>Created economic theory from scratch to explain the Great Depression</td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-money"></i></td>
    <td> </td>
    <td> </td>
    <td>Became a millionaire by trading on the stock market</td>
  </tr>
</table>

---

# John Maynard Keynes (1883-1946)

<table class="none">
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-quote-left"></i></td>
    <td> </td>
    <td> </td>
    <td><em>He was the one really great man I ever knew, and for whom I had unbounded admiration.</em>
    <br>
    <span style="display: block; text-align: right;">Friedrich Hayek</span></td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-quote-left"></i></td>
    <td> </td>
    <td> </td>
    <td><em>Keynes must be one of the most remarkable men that ever lived&mdash;the quick logic, the birdlike swoop of intuition, the vivid fancy, the wide vision, above all the incomparable sense of the fitness of words, all combine to make something several degrees beyond the limit of ordinary human achievement.</em>
    <br>
    <span style="display: block; text-align: right;">Lionel Robbins</span></td>
  </tr>
  <tr style="background-color: transparent;">
    <td>  </td>
    <td>  </td>
    <td>  </td>
    <td>  </td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-quote-left"></i></td>
    <td> </td>
    <td> </td>
    <td><em>Keynes's intellect was the sharpest and clearest that I have ever known.</em>
    <br>
    <span style="display: block; text-align: right;">Bertrand Russell</span></td>
  </tr>
</table>

---

class: clear, middle, no-scribble
  
  .font200[
<strong>  Let's Get Down To Business</strong>
]
<hr>

---

class: clear, middle, no-scribble
  
  .font200[
<strong>  Economy Versus Economics</strong>
]
<hr>

---

# Defining Economics

<br>

<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>economics</b></td>
    <td> </td>
    <td> </td>
    <td>the study of how society manages its scarce resources</td>
  </tr>
  <tr style="background-color: transparent;">
  <td>   </td>
  <td>   </td>
  <td>   </td>
  <td>   </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> other social sciences include: history, linguistics, anthropology, sociology, political science, psychology </td>
  </tr>
  <tr style="background-color: transparent;">
  <td>   </td>
  <td>   </td>
  <td>   </td>
  <td>   </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-lightbulb-o"></i></td>
    <td> </td>
    <td> </td>
    <td> economics, it turns out, is also the study of how economists think about the economy, by studying economics one can learn as much about the economists as about the economy </td>
  </tr>
</table>

---

# The Ascend of Economics

---

.pull-right-2[
_The age of chivalry is gone; that of sophisters, economists, and calculators has succeeded._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Edmund Burke </span>
]

---

# Defining Economy

.pull-right-2[
_It's the economy, stupid!_
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Bill Clinton campaign slogan, 1992 </span>
]

<table class="none">
<tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>&nbsp;</b></td>
    <td> </td>
    <td> </td>
    <td>&nbsp;</td>
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>economy</b></td>
    <td> </td>
    <td> </td>
    <td>all the production and exchange activities that take
place every day; a group of people dealing with one
another as they go about their lives; a collection of
resources together with the set of institutions that
govern their use; a system for coordinating society's
productive activities; a particular group of individuals who have organized themselves
socially for solving their economic problem.</td>
  </tr>
</table>

---

# Three Basic Economic Problems

.pull-right-2[
_In capitalism man exploits man. In socialism it is just the reverse._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> John Kenneth Galbraith&nbsp;<br> </span>
]

<table class="none">
  <tr style="background-color: transparent;">
  <td> </td>
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-question"></i></td>
    <td>What to produce</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> &nbsp; </td>
  <td> &nbsp; </td>
  <td> &nbsp; </td>  
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-question"></i></i></td>
    <td> How to produce it </td>
  </tr>
  <tr style="background-color: transparent;">
  <td> &nbsp; </td>
  <td> &nbsp; </td>
  <td> &nbsp; </td>  
  </tr>
  <tr style="background-color: transparent;">
   <td> </td>
    <td style="text-align: center; vertical-align: middle;"><i class="fa fa-question"></i></td>
    <td> For whom to produce it </td>
  </tr>
</table>

---

class: clear, middle, no-scribble
  
  .font200[
<strong>  Mankiw's Ten Principles of Economics</strong>
]
<hr>

---

# Overview

---

class: clear, middle, no-scribble
  
  .font200[
<strong>  Humans Optimize...</strong>
]
<hr>

---

# Principle 1: People Face Trade-offs

.pull-right-2[
_The business of business is a lot of little
decisions every day mixed up with a few big
decisions._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Tom Murphy&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>trade-off</b></td>
    <td> </td>
    <td> </td>
    <td>a choice that entails sacrificing one alternative to get
another</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> studying economics versus exercising;
saving/investment versus consumption; cleaner
environment versus more production; risk versus reward; short-term performance
versus long-term health; equality vs efficiency; </td>
  </tr>
</table>

---

---

# <span style="font-size: 100%; position: relative; top: -75px;">Principle 2: The Cost of Something is What You Give Up to Get It</span>

.pull-right-2[
_The right way to make decisions in practical
life is based on your opportunity cost._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Charlie Munger&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>opportunity cost</b></td>
    <td> </td>
    <td> </td>
    <td>whatever must be given up to obtain some item</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> Bill Gates dropped out of Harvard in order to start Microsoft; Mark Zuckerberg dropped out of Harvard in order to develop Facebook full time; </td>
  </tr>
</table>

</div>

---

# <span style="position: relative; top: -75px;"> Principle 3: Rational People Think at the Margin </span>

.pull-right-2[
_Both Warren and I feel it's our moral duty to be as rational as we can possibly be._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Charlie Munger&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>rational people</b></td>
    <td> </td>
    <td> </td>
    <td>people who systematically and purposefully do the
best they can to achieve their objectives</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> Gregory wants to improve his chances of having high
material standard of living in the future, does
some research, decides to get a degree in chemical
engineering, studies hard and gets accepted in MIT </td>
  </tr>
</table>

</div>

---

# <span style="position: relative; top: -75px;"> Principle 3: Rational People Think at the Margin </span>

.pull-right-2[
_In a nutshell, calculus wants to make hard
problems simpler._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Steven Strogatz&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>marginal change</b></td>
    <td> </td>
    <td> </td>
    <td>a small incremental adjustment to a plan of action</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> Gregory compares the expected marginal benfit of
studying chemical engineering for one more hour to the
marginal cost (spending time with his friends) and
decides to go out with his friends </td>
  </tr>
</table>

</div>

---

# <span style="position: relative; top: -75px;">  Principle 4: People Respond to <br>Incentives </span>

.pull-right-2[
_I think that I have been in the top 5% of
my age cohort all my life in understanding
the power of incentives, and all my life I
have underestimated it._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Charlie Munger&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>incentive</b></td>
    <td> </td>
    <td> </td>
    <td>something that induces a person to act</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> A FedEx logistics center was only able to move all packages on time after they started paying the night
employees per shift instead of per hour </td>
  </tr>
</table>

</div>

---

class: clear, middle, no-scribble
  
  .font200[
<strong>  ... By Interaction...</strong>
]
<hr>

---

# <span style="position: relative; top: -75px;"> Principle 5: Trade Can Make Everyone Better Off </span>

.pull-right-2[
_mutuality of advantage from voluntary exchange... is the most fundumantal of all understandings in economics._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> James M. Buchanan </span>
]

---

# <span style="position: relative; top: -75px;"> Principle 6: Markets Are Usually a Good Way to Organize Economic Activity </span>

.pull-right-2[
_Unlike the case of tradition and command,
in which we quickly grasp the nature of the
production and distribution mechanisms of
society, when we turn to a market society
we are lost without a knowledge of
economics._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Robert Heilbroner </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>market economy</b></td>
    <td> </td>
    <td> </td>
    <td>an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> Singapore, Switzerland, Ireland, Taiwan </td>
  </tr>
</table>

</div>

---

---

# <span style="position: relative; top: -75px;"> Principle 6: Markets Are Usually a Good Way to Organize Economic Activity </span>

.pull-right-2[
_The more the state "plans" the more
difficult planning becomes for the individual._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Friedrich Hayek&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>centrally planned economy</b></td>
    <td> </td>
    <td> </td>
    <td>an economy where central planners decide what goods and services to be produced, how much to be
produced, and who to produce and consume these
goods and services</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> North Korea, Cuba, former USSR </td>
  </tr>
</table>

</div>

---

# Tale of Two Economies

---

---

# <span style="position: relative; top: -75px;"> Principle 7: Governments Can Sometimes Improve Market Outcomes </span>

<br>

<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>property rights</b></td>
    <td> </td>
    <td> </td>
    <td>the ability of an individual to own and exercise control over scarce resources</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> A young physician chooses to start work in Sofia </td>
  </tr>
</table>

<br>

<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>market failure</b></td>
    <td> </td>
    <td> </td>
    <td>a situation in which a market left on its own fails to allocate resources efficiently</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> production or consumption externality; market power </td>
  </tr>
</table>

</div>

---

# <span style="position: relative; top: -75px;"> Principle 7: Governments Can Sometimes Improve Market Outcomes </span>

<br>

<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>externality</b></td>
    <td> </td>
    <td> </td>
    <td>the impact of one person's action on the well-being
of a bystander</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> a coal-fired power station polluting the air </td>
  </tr>
</table>

<br>

<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>market power</b></td>
    <td> </td>
    <td> </td>
    <td>the ability of a single economic actor (or a small group
of actors) to have a substantial influence on market prices</td>
  </tr>
  <tr style="background-color: transparent;">
  <td> </td>
  <td>  </td>
  <td>  </td>
  <td>  </td>  
  </tr>
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><i class="fa fa-globe"></i></td>
    <td> </td>
    <td> </td>
    <td> utility company restricting output and raising prices </td>
  </tr>
</table>

</div>

---

class: clear, middle, no-scribble
  
  .font200[
<strong>  ... Resulting in Aggregate Outcomes!</strong>
]
<hr>

---

# <span style="position: relative; top: -150px;"> Principle 8: A Country's Standard of Living Depends on Its Ability to Produce Goods and Services </span>

.pull-right-2[
_Once one starts thinking about them
[questions related to economic growth], it is
hard to think about anything else._
<hr style="background-color: black; margin: 0em 0em 0em 0em;">
<span style="float: right; font-variant: small-caps; "> Robert Lucas Jr.&nbsp;<br> </span>
]
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>standard of living</b></td>
    <td> </td>
    <td> </td>
    <td>refers to the amount of goods and services that can
be purchased by the population of a country</td>
  </tr>
</table>
<table class="none">
  <tr style="background-color: transparent;">
    <td style="text-align: center; vertical-align: top;"><b>productivity <br> (of labor)</b></td>
    <td> </td>
    <td> </td>
    <td>the quantity of goods and services produced from each unit of labor input</td>
  </tr>
</table>

</div>

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  .font200[
<strong>  Productivity in Agriculture</strong>
]
<hr>

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  .font200[
<strong>  Work Ethos and Productivity</strong>
]
<hr>

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# Questions?

<br>

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# Thank You!

<br>