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Tell them what you're going to tell them, tell them,

then tell them what you told them.

That's the first rule of good journalism and it works pretty well for teachers too.

So for each lesson in our microeconomics course, that's the rule we will follow.

And by the way, this tell them first, which we're going to tell them approach,

is a great method for

you to follow as well anytime you yourself have to make a presentation.

It's all about, what we call in business school,

building up your soft skills, in this case, your presentation skills.

Anyway, in this lesson, here's our basic checklist.

This is the tell them what you're going to tell them part.

I'm going to start with a bunch of interesting questions

that a knowledge of microeconomics can help you answer.

This is, what we call in the teaching biz, the hook or the motivator to get your head

wrapped around the idea that economics is actually pretty interesting and valuable

rather than some stupid, boring stuff you have to endure to get your degree.

Next, we will more precisely define microeconomics with the help of

one of the pioneers of capitalism, the 18th century Englishman, Adam Smith.

And, spoiler alert here, most of what the oft called godfather

of supply and demand tells us about the virtues of free market and it's so

called invisible hand has little to do with the reality of global trade today.

That's said, Adam Smith's model of perfect competition is very useful as a starting

point to understand how markets often work very well but sometimes don't work at all.

In the third part of the lesson, we will embrace our first big idea and

important microeconomics tool, the production possibilities frontier,

to help us explain the concepts of scarcity, efficiency, and equity.

In fact, this so called PPF is a cool little graphic concept

that will help us understand how any given nation, from India, Turkey, and

Vietnam to Canada, Cuba, and the various members of the European Union,

decides how to allocate resources between so called guns versus butter.

Of course, it's not literally a choice between killing enemies or

feeding citizens but rather simply a metaphor to describe the tough

public choices every country faces between meeting its legitimate national

defense needs and providing other critical needs like bridges and

roads and education and healthcare, and yes, butter and other food.

And finally, we will finish up the lesson with a roadmap of what the rest

of the course will look like, roughly speaking and in chronological order,

this microeconomics course will be divided up into lessons that focus on supply,

demand, and market equilibrium,

consumer behavior, production theory, the various market and

industry structures, including the problems of oligopoly and monopoly,

the setting of rents, wages, and interest rates for land,

labor, and capital in so called factor markets,

the arguments for government intervention into the marketplace that are driven by so

called market failures like externalities and the public goods problem,

and finally some really interesting issues related to taxation,

the public financing of government infrastructure and services, and

the distribution of income and wealth in a world of inequality.

Of course, along this journey, I will show you how each of the many insights,

lessons, and tools of these various facets of microeconomics

feed into the broader business education puzzle and business strategy models.

And the obvious idea here is to make this subject live and breathe for

you in a way that will help you prosper in the coming years and decades.

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Now, one last thing before we get going and it's a bit of a warning here.

In the cold-hearted and hard-headed rational world of economics,

we always want to distinguish between what's efficient in the marketplace and

what might be fair.

This is the so called efficiency-equity tradeoff

that often exists when government intervenes into the free market.

Take, for example, the minimum wage, a topic of endless debate

between ideological conservatives versus ideological liberals.

>> As a staunch liberal,

I must insist that a government mandated minimum wage is both necessary and

fair to prevent the exploitation of workers and keep people out of poverty.

>> Well, as a free market conservative, I must insist

that a minimum wage will only lead to companies hiring fewer workers and

this market inefficiency will only create more poverty.

>> Okay, get used to these cheesy skits from my business cartoon time.

Even I need a little comic relief sometimes from the dismal science of

economics and you should have some, too.

Anyway, my point here is simply that when dealing with contentious political issues

like the minimum wage and progressive income taxes and immigration laws,

economic analysis can help evaluate the competing costs and

possible benefits of making political decisions.

And at least sometimes, in this cold-hearted,

hard-headed process, what appears to be good economic,

often clashes with what might be good politics or good social policy.

So always keep this important distinction between equity and

efficiency in mind and it may help you see things in the world a bit more clearly.

At any rate, with that introduction,

please move onto the next module of the lesson when you are ready.

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An Intro to Microeconomics for Managers

Strategic Business Management - Microeconomics

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