ECON 110 is an introductory microeconomics course. We cover various topics, but the unifying theme is trying to understand where prices are coming from. The tools you will learn are useful for gaining some understanding of managerial decision making, government policies and various economic and social phenomena.
The quantitative reasoning aspect of the course takes three forms:
Equations and formulas
We use equations to describe relationships between various economic variables. For example, we may write:
T = 100 −F
where F is the fine for a parking violation, set by the city of New Haven, and T is the number of parking tickets that will be written out in a given week. This says that the higher the fine set by the city, the more reluctant people will be to park where they are not supposed to and, hence, the fewer tickets they will accumulate.
All the mathematics we use is at the level of SAT-1, i.e. high school algebra and geometry. For the most part, you only need to know how to solve a linear equation of one variable (y = a+bx) and calculate the areas of triangles, rectangles and trapezoids. We use neither calculus nor trigonometry.
Graphs
People find it easier to understand pictures than words or mathematical symbols. Therefore, we will often translate equations to graphs. For example, you may be asked to do the following.
Question: Draw the previous equation, T = 100 – F (with T on the horizontal axis and F on the vertical axis). Then, calculate the area under this curve.
Answer: This is a straight line with slope -1. The area under the line equals the area of a right triangle with base = height = 100. Hence, the area is equal to 1/2(base)(height) = 5,000.
Modeling
Our analysis of each topic typically involves the following steps. First, we identify the key variables that affect the problem we are analyzing. This step usually requires from us to make simplifying assumptions that impose some structure on the problem, which would otherwise be too complex. Then, we describe the relationship between the key variables using mathematical equations or graphs. Finally, we follow a deductive approach to work out the implications of our previous assumptions.