1. Introduction and Supply & Demand

Step-by-Step Tutorial: Introduction to Microeconomics and Supply & Demand

Step 1: Course Overview

1. Jonathan Gruber introduces the course 14.01, focusing on three main points: course details, microeconomics, and supply and demand.
2. He mentions that the course will have a policy angle and offers an interesting perspective on economic policy.
3. Gruber emphasizes his teaching style, encouraging students to ask questions and engage in discussions.

Step 2: Understanding Microeconomics

1. Microeconomics is explained as the study of how individuals and firms make decisions in a world of scarcity.
2. The concept of opportunity cost is introduced, highlighting that every action has an alternative that could have been chosen.
3. Gruber relates microeconomics to constrained optimization exercises where economic agents aim to maximize their well-being within constraints.

Step 3: Supply and Demand Model

1. The supply and demand model is discussed as a fundamental concept in economics.
2. Gruber explains the relationship between price and quantity in the market using demand and supply curves.
3. Market equilibrium, where supply and demand intersect, is defined as the point where both consumers and producers are satisfied with the transaction.

Step 4: Positive vs. Normative Analysis

1. Positive analysis focuses on the way things are, while normative analysis focuses on the way things should be.
2. Gruber illustrates positive vs. normative analysis using the example of eBay auctions and the sale of a kidney.
3. The discussion delves into the implications of allowing individuals to sell kidneys, considering market failures, equity, and behavioral economics.

Step 5: Economic Systems

1. Gruber contrasts capitalist and socialist economic systems, highlighting the role of the market in resource allocation.
2. The concept of the "invisible hand" in capitalism is explained as the idea that individuals and firms acting in their self-interest can lead to the best outcomes for society.
3. The lecture concludes with a discussion on how individuals and firms make decisions within different market structures and the importance of understanding market failures and equity issues.

Step 6: Recitations and Problem Sets

1. Gruber emphasizes the importance of attending recitations, which cover both new material and problem-solving sessions.
2. Problem sets are assigned to reinforce understanding and application of concepts discussed in lectures.
3. Students are encouraged to engage in discussions, ask questions, and seek clarification during recitations and office hours.

By following these steps, you will gain a comprehensive understanding of the introductory concepts of microeconomics and the supply and demand model as presented in the MIT OpenCourseWare lecture by Jonathan Gruber.