1. Introduction


1.1 Caution: You are about to repeat yourself!

Economics, as a discipline of thought, follows a basic pedagogic helix: up around, repeat; up around, repeat but on a progressively higher plane of comprehension with each subsequent turn of the mental screw.

[Aside: to the ancient Greeks, the circle was perfection, everything repeating itself. To the ancient Celts, it was the spiral.  In this historical mood it is also appropriate to note that there are two elemental approaches to mathematics.  One can be called 'Sumerian' or 'Babylonian' through whom we have evolved algebra then, through Newton, calculus - both differential and integral.  This approach is rooted in astrology and then astronomy. The other tradition is Greek through whom we have evolved geometry  - both Euclidian and non-Euclidian.  This approach is rooted in architecture and urban design as well as economics.  In fact, this course is taught in the second tradition.]

This pedagogic technique engages the psychological process known as  reculer pour mieux sauter (step back to leap forward) in the intellectual ‘disciplining’ of higher education, i.e. molding minds to think in a disciplined or professional way whether that be accounting, economics, history, law, medicine, psychology, religion, etc.  Accordingly, notes made for an introductory economics course should prove helpful as the foundation for ‘the great leap forward’.  Unlike introductory economics, however, the student will be required to explain and demonstrate understanding of the basic principles rather than select among multiple choice answers.

Economics is not just about ‘technique’, e.g. mathematical calculation of a demand curve, it is also about history, changing institutions and, most importantly, satisfying infinite human wants, needs and desires with but limited means. The economy is the water in which the human goldfish –whom Keynes called homo economicus – swims. Like most goldfish, most of us do not see the water. It is a raw reality, a fact of life like birth, death and taxes. The economic mind, however, is trained and disciplined to constantly assess its changing quality and characteristics including income, prices and preferences for goods - both tangible and intangible - that satisfy human wants, needs and desires as well as the mutating and changing means and methods to produce such goods. [Aside: ‘goods’ good things, things that are good - tangible or intangible.]

Testing will be based on your understanding and ability to ‘manipulate’ the ‘standard’ Neo-Classical model; ‘standard’ questions will be posed drawn from your text book and related curricular materials.  In essence, it will focus on 12 basic graphic models, their assumptions, derivation, manipulation and variation (in Econ 111 you have already seen all except  6, 10, 11 & 12, below).  They are:

Consumption Production


1. Indifference Map

2. Constrained Utility Maximization

3. Income-Consumption Curve

4. Price-Consumption Curve

5. Income/Substitution Effects

6. Engel Curve

7. Demand Curve

8. Cost Curves & Constrained Profit Maximization

9. Supply Curve


10. Partial Equilibrium

11. Marginal Revenue

12. General Equilibrium


 Testing will involve proof of your ability to make a clear and concise (or 'economic') presentation that  :

(a) states all necessary assumptions serving as the foundation for a model including assumptions about the overall model itself, its components parts and any related coefficients;

(b) define all terms used [both those in (a) above and (c) below];

(c) graphically present the model with all necessary titling (naming of parts) and any derivation(s) required by the question; and,

(d) from (c) above 'read the results' and comment on any policy implications that flow there from.

To appreciate power of this 'Neo-Classical Model' - the dominant geopolitical paradigm of our age - one should not just look at  the World Trade Organization (WTO), but also its peculiar historical and philosophic evolution.  To do so I will, in the next Lecture,  consider  the age-old question at the root of its development: What is the 'just price'?


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