C.V. A.M.D.G.

Econ 190
Prerequisites: Willingness to work, learn, think, question
Messages:
11/1/10 Hmwk #6 link + Revised Hmwk #6 date
Revised Hmwk #5 date and Treasure Hunt #3 Date see reading assignments
Hmwk 2 Link
Extra Credit Available

        Peter Alonzi, Ph.D.

     Last Revised 09/20/10

Fall, 2010
Microeconomics
Day: Tuesday & Thursday
Time: 10:00 – 11:15 am
Room: Crown 320

Contact Information: by phone or email at: 708-524-6483 or Lpalonzi@dom.edu
Click for: [Objectives] [Outline] [Expectations] [Grading] [Homework] [Treasure Hunt] [Exams] [Reading Assignments]

Office Hours:

Day	Tuesday	Wednesday	Thursday
Time	3:30-5:00 p.m. & by appointment	By appointment	1:45-3:00 p.m. & by appointment
Place	Fine Arts 220 C	Fine Arts 220 C	Fine Arts 220 C

Text:
* McConnell, Campbell R., Stanley L. Brue, & Sean M Flynn. Economics 18^th ed. (or 17^th) New York: NY, McGraw-Hill/Irwin, 2008

Objectives: Click to Return Home
Economics is a structured way of thinking. This course presents you the opportunity to learn this way of thinking. It introduces you to the discipline of economics by providing a basic understanding of economic principles, by explaining how a market system works and fails, and by applying economic principles (i.e., by practicing with the tools of economic analysis). In addition it is also an opportunity to begin learning what remains unknown. After all, raising and trying to answer questions is the growing edge of the mind.

The successful student will:
1. Add many words to her/his vocabulary.

2. Be able to use demand & supply tools to analyze price & output changes.

3. Be able to compute the elasticity of demand and understand the concept of elasticity.

4. Explain how price signals allocate scarce resources.

5. Understand & apply the marginal-benefit-vs.-marginal-hurt principle to household & firm decisions.

6. Compute profits using average revenue & cost as well as total revenue & cost.

7. Understand how a competitive market system works--yields an efficient allocation of resources.

8. Explain how a market system fails to allocate scarce resources efficiently due to frictions.

9. Find economics useful as it enables her/him to discuss economic matters confronting a citizen today.

10. Find economics essential, useful, & fascinating because it illuminates the effort humanity devotes to provisioning itself day in & day out and this illumination makes the world a better place

Course Outline Click to Return Home

1. Facts of
    Economic Life
    & Tools &
    Principles

a. Fact of Economic Life: Scarcity
b. Tools: Map of the Economy Circular Flow, Graphs, Models
c. Core Principles
   i. Opportunity Cost    (& Increasing Opportunity Cost)
ii. Marginal Benefit vs. Marginal Cost
iii. Equilibrium
iv. Efficiency
v. Comparative Advantage

2. How Does a
    Competitive
    Market Work?

a. Nine Pillars Necessary for a Competitive Market
b. Demand, Supply, Equilibrium
c. Price Controls: Surpluses, Shortages
d. Shocks and Shifts
e. Elasticity
f. Consumer Surplus, Producer Surplus, Efficiency

3. How Does a
    Competitive
    Market System
    Work?

a. Overview: Approach: Decision Calculus: Marginal Benefit vs. Marginal Hurt
          1. MU_x vs. P_x
          2. P_x vs. MC_x
          3. VMP vs. P_resource
          4. MU_x^society vs. MC_x^society
b. Goods Markets (Product, Output)
   i. Household:
          1. MU_x vs P_x
          2. Rational Spending Rule MU_x/P_x = MU_y/P_y
          3. Marginal Rate of Substitution (MRS≡ MU_x/MU_y)) vs. Relative Price (P_x/P_y)
           * Law of Diminishing MU (MRS) + Substitution+Income Effects→ Law of Demand
   ii. Firm:
           1. P vs. MC
            * Law of Diminishing Returns → Law of Supply
   iii. Role of Economic Profits: Long Run Supply and Equilibrium
   iv. Efficiency Viewed from Goods Markets: Right Amount & Best Mix at Least Cost
c. Resource Markets (Raw Materials, Inputs)
   i. Household:
             1. MU_leisure vs Wages
             * Law of Diminishing MU (MRS) + Substitution + Income Effects→ Resource Supply
   ii Firms:
             1. VMP vs P_resource,
             * Law of Diminishing Returns → Resource Demand
             ** Resource prices: labor-wage rate, land-rental rate, capital-interest rate)
d. Efficiency Is the Result: Competitive Markets yield least cost for right amount of X

i. Q_x^d = Q_x^s ….. No surplus i.e. no waste
	Least Cost
ii. P_x = min LAC_x_….No Economic Profits
		EFFICIENCY
iii. MU_x = P_x = MC_x …………………………..	Right Amount
iiib. From resource side: P_x*MP_labor = W = MU_leisure

4. How Does a
Market System
Fail to Work?

* Loss of One of 9 Pillars of Prefect Competition Leads to Market System Failure
a. Market Power: Lack Lots of B/S so Monopoly hence P > MC
b. Externalities: Property Rights Not (or poorly) Defined hence P < MC_social
c. Public Goods: Property Rights Can Not Be Enforced hence MC_social > P
d. Asymmetric Information: Unequal information by buyers & sellers hence P ≠ MC

5. Equity in Mkt Sys

a. Income Distribution; b. Government's Role: property rights! taxes? regulator? stabilizer?

Expectations: Click to Return Home
1. All assignments will be read before class and reread after class.      READERS ARE LEADERS! Read before coming to class, so in class it is your 2^nd time through. Then when you study after class it is your 3^rd time through. 1-2-3 & the material jells. Think about it. How many times have you have seen your favorite movie. With each viewing, you understood more. Economics is the same way. Each time you work through the material you understand more clearly. Concepts fall into place. It all clicks! The jello sets. There is no short cut to the process.
2. That you will read effectively: First preview (intro & summary). Second observe headings. They are the outline! Third read with pencil in hand to jot down confusions & questions, to work out explanations, to try graphing on your own, and to do in-chapter exercises. Fourth distill, synthesize, compare & contrast, summarize. Fifth, try one or two end-of-chapter problems, answer one or two end-of-chapter questions. If confusion arises rather than clear insight, use office hours. See expectation #4 below.
3. Do 2 for 1--study 2 hours for every hour in the class (i.e. reading effectively, outlining, synthesizing, reflecting on confusions, discussing with a study buddy, formulating questions for class, doing in-chapter exercises, doing homework tasks…)
4. Students will recognize and identify confusion and ask trim as opposed to flabby questions.
5. Use office hours without delay…when confusion emerges, unresolved questions persists, an interesting question arises, or whenever you want.
6. Attend all class sessions & be on time for class.
7. I expect you to take up the challenge!

Economics is challenging!
1. It draws on many disparate talents. John Maynard Keynes one of the greatest economists of the 1900’s observed that an economist must be:
            "mathematician, historian, statesman, philosopher …He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and     concrete in the same flight of thought. He must study the present in the light of the past for the    purposes of the future. No part of man’s nature or his institutions must lie entirely outside his             regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and       incorruptible as an artist, yet sometimes as near the earth as a politician."
                        John Maynard Keynes, “Alfred Marshall,” in Essays in Biography, in the Collected Writings                                                             of John Maynard Keynes, vol. x (London and New York: Macmillan/St. Martin’s Press for the Royal Economic                            Society, 1972), p 173.
2. Economics uses graphs & equations.
3. It is a structured way of thinking.
4. Economics is cumulative.
5. Economics requires study time! Often students tell me, “Professor I get it when you explain it in class but then when I study this stuff it all jumbles up and I am confused.”   I have similar thoughts when I watch the Olympic figure skaters. They make it look so easy. But when I try to do what they do the graceful flowing strides and long smooth glides are absent. I wobble along falling and running into the boards often.   In a sense, my skating is all jumbled and confused. Then I realize that those skaters have spent many hours in practice to become accomplished. And then they practice even more to become Olympians. Their accomplishment is the fruit of their many hours. Remember that I make Economics understandable because just as the Olympic skaters spent many hours learning and practicing, I have spent many hours studying/practicing Economics. So I have a head start on you. Economics as any discipline requires that you spend the time studying. For many students they need more study time for Economics than in many of their other courses. I expect you to spend the time you need to spend.

If you read effectively the assignments before coming to class, attend all class sessions, do 2 for 1, ask trim questions, work diligently on all the homework assignments, get a study buddy or study group, and use office hours when you need to, then I know you can meet the challenge!

Grading/Assignments Click to Return Home

Basis of the Grade
Your grade will be earned on the basis of three exams, eight homework assignments, and the Treasure Hunt. The weighting and points for each opportunities for you to show your stuff and earn your grade is:

Homework	Treasure Hunt Pages	Better of Midterm #1a or #1b	Better of Midterm #2a or #2b	Exam #3
10%	10%	25%	25%	30%
100 points	100 points	250 points	250 points	300 points

Grading Scale

Grade	Points Range	% Range
A	1000-900	100-90%
A-	900-870	90-87%
B+	870-850	87-85%
B	850-770	85-77%
B-	770-750	77-75%
C+	750-720	75-72%
C	720-620	72-62%
C-	620-600	62-60%
D	600-500	59-50%
F	Under 500	Under 50%

Academic Integrity
Each student is expected to adhere to the highest standards of academic integrity. Any student who does not will be penalized severely. In the past the penalty included but was not necessarily limited to a score of zero on the task in question. There can be other sanctions Prof. Alonzi deems appropriate including failure of the course. Conduct that fails to adhere to the highest level of academic integrity includes but is not limited to dishonesty, cheating, plagiarism, and forgery. See pages 29-30 of the
2010-12 Dominican University Undergraduate Bulletin for the University’s Academic Integrity Policy & definitions of dishonesty, cheating, plagiarism, forgery, misuses of university documents or dishonest acts at:
https://jicsweb1.dom.edu/ics/Resources/Student_Services/Registrar's_Office/Undergraduate_Students/Undergraduate_Bulletin.jnz

Homework: Click to Return Home
1. There will be 8 homework assignments.

2. You may work together on homework; each student should participate fully.

3. Each student must hand in his or her own assignment (written or typed by their self).

4. Original and one copy of the homework are required: original is turned in and the copy the student keeps at her/his seat as the homework is discussed in class.

5. Homework is due in class on the date designated in reading assignments.

6. Late homework is unacceptable (if you are sick send it in with a classmate).

7. Homework that is neatly done, exhibits honest effort & is received on time receives credit as follows

# homework assignments That are Acceptable	8 of 8	7 of 8	6 of 8	5 of 8	Less than 5
% Earned & Letter Grade	105% A+	95% A	80% i.e. B	65 % C	0% i.e. F
Course Points Earned	105 points	90 points	80 points	65 points	0 points

Treasure Hunt Pages Click to Return Home
You are on a treasure hunt in this course. This project gives you the opportunity to apply what you learn in the course. In this hunt you will find in print articles or ads examples of the economic principles/concepts listed in the table just below. You will need to find 6 of the 12. For each one you will do a one page write up described below. At the end you will have 6 pages of treasure!

Economic Principles and Concepts for the Treasure Hunt
1. Law of Demand	5. Elasticity	9. An Externality
2. Law of Supply	6. Principle of Marginal Benefit vs. Marginal Hurt in Action	10. A Public Good
3. Price Signal in Action	7. Law of Diminishing Returns or Increasing Marginal Cost	11. Monopoly
4. Price Control	8. Profit Signal in Action	12. Product Differentiation

A sample page given on page 10 towards the end of the syllabus. Blank copies are downloadable from Treasure Hunt Page.
For a page to be acceptable it must meet the following 10 guidelines:
1. Indicate the concept or principle,
2. Present an article or ad that occurs during the fall term 2010
3. And the article accurately embodies the claimed principle/concept,
4. Give the proper citation of the article you have chosen:
     For print media of newspaper or magazine (author, publication source, date, section, page, column)
     For internet media: url, date accessed,
5. Tape the article or ad that illustrates the principle,
6. Underline the key part of the article or ad related to the economic concept/principle,
7. In the space provided present your typed, brief—50 words or less—explanation of how the article captures, illustrates, embodies the concept or principle you claim. Use 10 point Arial font!
8. Have one classmate’s signature attesting to the fact that she/he did truly read your article & your explanation, rated it (very effective to ineffective), and discussed it with you.   Some class time will be allowed for the reviewing process but you will probably have to do some of the reviewing work outside of class time.
9. In the space provided contain your brief—50 words or less--reflection paragraph (Use 10 point Arial font) stating what you learned in your discussion with your classmates.
10. Be neatly done, the student’s work, and received on time.

Remember for a Treasure Hunt Page to be acceptable it must meet the 10 guidelines stated above.

Treasure Hunt Pages (cont.)Treasure Hunt Pages that are acceptable receive credit as follows:

Acceptable TReasure Hunt Page	6	5	4	3	Less than 3
% Earned & Letter Grade	105% A+	90% A	80% i.e. B	40 % F	0% i.e. FFF
Course Points Earned	105 points	90 points	80 points	40 points	0 points

Exams Click to Return Home
1. Exams are the work of the individual student (non-cooperative) and closed book.
2. Format
i. Short answer including but not limited to define terms, list items, compute values, relate concepts, distinguish between concepts, draw & explain diagrams, and explain the significance of a concept and
ii. Application of models developed to analyze situations in the form of problems and short essays.
3. During exams
3a. you may use simple calculators whose functions are LIMITED TO addition, subtraction, multiplication, & division.
3b. Prohibited items during exams include:
i. Calculators with alpha as well as numeric storage capabilities or with formula storage capability such as but not limited to TI-84 or above.
ii. Cell phone use of any kind.
iii. Personal digital assistants, or any electronic device not mentioned above that can convey information pertinent to the course
iv. Books, notes, or any other source of information.
v. Water bottles, food, hats, and wristbands.

4. You may not leave the testing room once an exam has begun. (Use the bathroom before coming to class.)

5. There will be two midterm exams and a final exam.

a. The first midterm will be offered twice. You may take either the initial (A) or the later (B) offering of the midterm or both. If you take both test A & B, then the higher score will count in the computation of your course grade. Since the midterm is offered twice there should be no need for a makeup exam. ONLY IF PROF ALONZI DETERMINES THAT A STUDENT’S SITUATION IS EXTRAORDINARY, DIRE, AND EXTREME CAN A MAKEUP BE TAKEN. Do not assume your situation is dire and extreme, contact Prof Alonzi to discuss your situation.

b. The second midterm will be offered twice using the same approach as the first midterm.

c. The third exam which is the final exam will only be offered once.

6. A makeup exam is a privilege not a right. It is reserved for only the most extraordinary, dire, and extreme situations. If Prof Alonzi determines that a makeup exam is warranted, then it will be administered during final exam week.

Other Materials:
> A simple calculator whose functions are limited to addition, subtraction, multiplication, and division.
> We will be using graphs. You will find colored pencils (or pens) and a straight edge useful.

Econ 190 Planned Reading Assignments as of 8/23/10 Click to Return Home
Revised reading assignments will be posted if the need arises. Check the date in the upper left-hand corner to assure you have the most recent reading assignments.

In Minimum Assignment Column readings in the 18^th ed are in black and above the readings in the 17^th edition which are in red

*8/23/10*	Planned Reading Assignments	McConnell/Brue/Flynn 18^th ed McConnell/Brue 17^th ed.
Session/Date	Topic	Minimum Assignment
#1/Aug 31 T	* *Course Organization*
#2/ Sept 2 Th	* Tool: Graphs	* Ch 1 appendix * Ch 1 appendix
#3/ Sept 7 T	* The Economic Fact of Life: Scarcity >Sample Treasure Hunt Page	* Ch 1 & Ch 2 * Ch 1 & Ch 2
#4/ Sept 9 Th	* How a Competitive Market Works: > What are Competitive, Demand, and Supply?	* Ch 3, pp 45-54 & skim rest ch * Ch 3, pp 45-53 & skim rest ch
#5/ Sept 14 T	* How a Competitive Market Works > Demand Plus Supply Yield Equilibrium (so No Sin Is Private!) > Do Better on Price? Price Controls and Equilibrium	* Ch 3, pp 54-56 & 59-62 * Ch 3, pp 54-55 & 58-62
#6/ Sept 16 Th	* How a Competitive Market Works: > How do P & Q Respond to Not Other-Things-Equal? [ not CP]? > 6 Steps Analysis and 9 Cases! > Treasure Hunt Page Time #1	Homework #1 * Ch 3 pp 57-58, 63-64,66-68 * Ch 3, pp 56-57 & 63--64
#7 Sept 21 T	* How a Competitive Market Works: > Applying Demand and Supply Analysis: * Tool: Model Method > Equilibrium, Shock, Shift, New Equilibrium	* Ch 3 * Ch 4 (general background) * Ch 3 * Ch 4 (general background)
#8/ Sept 23 Th	* How a Competitive Market Works: > Applications using a Model of a Competitive Market > Treasure Hunt Page Time #2	Homework #2 Due
#9/ Sept 28 T	Caritas et Veritas Symposium	Treasure Hunt Page #1 Due
#10/Sept 30 Th	* How a Competitive Market Works: Elasticity > How much Q Responds to a Shock? Elasticity Much! > Price Elasticity of Demand > Other Elasticities * Is the Competitive Market the friend or foe of Caritas et Veritas? One page reaction paper responding to this question in light of your work in this course and your attendance at the Symposium. Due next class Oct 5..	Homework #3 Due * Ch 6 * Ch 18 (Both Editions note: Consumer & Producer Surplus is on your own).
#11/Oct 5 T	* How a Competitive Market Works: Elasticity ( Continued)	Extra Credit: CV 1-Page Reaction Paper Due
#12/ Oct 7 Th	Review for Ex 1A	Homework #4 Due
#13/Oct 12 T	Exam 1A
#14/ Oct 14 Th	Review of Ex 1A * *How a Market System Works: Behind Household Demand* > Choosing Calculus: Marginal Benefit vs. Marginal Hurt > Treasure Hunt Page Time #3	Treasure Hunt Page #2 Due
#15/ Oct 19 T	* *How a Market System Works: Behind Household Demand* > 1^st way: MU_x vs P_x àLaw of Demand > 2^nd way: MU_x/P_x vs. MU_y/P_y à Substitution àLaw of Demand	* Ch 7 (skip appendix) * Ch 19 (skip appendix)
#16/ Oct 21 Th	Exam 1B
#17/Oct 26 T	* *How a Market System Works: Behind Household Demand* > 3^rd way: MRS vs Relative Price > Treasure Hunt Page Time #4	~~Homework #5 Due~~ now 10/28 * Ch 7 (skip appendix) * Ch 19 (skip appendix)
*Important:* *Prof Alonzi organizes the treatment of the Firm differently than the textbook authors. Prof Alonzi’s perspective emphasizes the decision making principle of* MB vs MH while the authors emphasize production theory and cost theory. Consequently the assigned readings for *Oct 28-Nov 9* will jump around in the text. This places a burden on you to grasp Prof Alonzi’s perspectives/organization despite the different organization/perspective used in the textbook. So read early, reread, and read more than the minimum assigned and then compare/contrast the author’s presentation/perspective of the firm with Prof Alonzi’s.
#18/ Oct 28 Th	* How a Market System Works: Behind Firm Supply >The Firm’s Goal: Profit Maximization—But what is profit? > Marginal Benefit vs. Marginal Hurt Again! > Mother Nature’s Role ßà Law of Diminishing Returns	Homework #5 Due * Ch 8, pp 154-159, 163 at MC, & study Figure 8.6 on p165, & p 173 summary * Ch 20 pp 378-84, 386 at MC-387, study Fig 20.6 on p. 389, p 396 summary (Note for both editions: we cover ATC, AVC, and Long Run later) ~~Treasure Hunt Pg #3~~ now 11/4
#19/ Nov 2 T	* How a Market System Works: Behind Firm Supply > Firm's Decisions: MB vs. MH in the Short Run (SR) > S comes from firm's MB vs. MH: P vs. MC	~~Homework #6 Due~~ changed to next class * Ch 9, pp 176-189 * Ch 21, pp 399-412 Note for both editions: Focus on Price & MC since we cover ATC & AVC later!
#20/ Nov 4 Th	* How a Market System Works: Behind Firm Supply > The Alphabet Game of Short Run Costs > Seeing Profits in the Short Run > Short Run Equilibrium > Profit (& Loss) Signals In the Long Run Long run mobility of resources from one industry to another	Homework #6 Due Short Run * Ch 8 pp 159-165, 172 * Ch 9 pp 181-89 * Ch 20 pp 384-389, 395 * Ch 21, pp 404-412 Long Run * Ch 8 pp 166-68 * Ch 9 189-199 * Ch 20 pp 389-391, * Ch 21, pp,412-422 Treasure Hunt Page #3 Due
#21/ Nov 9 T	*Review for Exam #2* * How a Market System Works: Behind Firm Supply > Production, Costs, & Computing Profit x 2	Homework #7
#22/ Nov 11 Th	Exam #2a
#23/ Nov 16 T	Review Exam #2a > Treasure Hunt Page Time #5	Treasure Hunt Page #4 Due
#24/ Nov 18 ThSFA	Exam #2b
#25/ Nov 23 T	* How a Market System Fails to Work (i.e. Coordinate) #1 Market Power: Monopoly & Government Response –Antitrust	Ch 10 Ch 22
#26/Nov 25 Th	THANKSGIVING BREAK
#27/Nov 30 T	* How a Market System Fails to Work (i.e. Coordinate) #1Market Power: Monopoly & Government Response-Antitrust > Treasure Hunt Page Time #6	Homework #8 Due Ch 10 & pp 222-229 Ch 22 & 444-450
#28/Dec 2 Th	* How a Market System Fails to Work (i.e. Coordinate) #2 Externalities #3 Public Goods and Social Choice #4 Asymmetric Information—Information Failures	* Ch 16 * Ch 28 Treasure Hunt Page #5 Due
#29/Dec 7 T	* How a Market System Fails to Work (i.e. Coordinate) #3 Public Goods and Social Choice #4 Asymmetric Information	* Ch 16 * Ch 28
#30/Dec 9 Th	*Review for Exam #3*	Treasure Hunt Page #6 Due
#31/Dec ?13-18 ?	Exam #3: Time and Place TBA
Undone	*How a Market System Works: Resource Markets* * Resource Demand: Firms, Mother Nature's Recipe & MP again * Resource Supply: Households, Human Nature & MU again *How a Market System Works: Resource Markets* Capital Market and Investment Economist's Different Definition of Investment How a Market System Fails to Work (i.e. Coordinate)* Income Distribution Click to Return Home	Ch 12, pp 252-262 Ch 13, pp. 270-277col 1, 280 col 2-284 Ch 25, pp 488-497 Ch 26 pp 505-11, 516-20 Ch 14 pp 299-305 Ch 27 pp 529-534 Ch 20 Ch 32

Name	* Concept/Principle *	Page #
Prof A.	Opportunity Cost	1

1. Citation: FRost, Robert. The Road Not Taken. The last stanza
http://www.bartleby.com/119/1.html accessed 8/13/2010 11:48 a.m.

2. Type the key Portion of your article here and Tape the original to the back of this page.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I--
I took the one less traveled by,
And that has made all the difference.

3. Tape your typed, brief explanation of 50 words or less here. Use 10 point Arial Font.

The speaker foregoes the more traveled road and the experiences to which it leads by choosing the road less traveled by. Thus the more traveled road is the speaker’s opportunity cost of choosing the less traveled road. The explanation plus this sentence makes forty six words.

The above message is in 10 point Arial font for you and meets the fifty word limit. Short isn’t it! You must be concise which requires thinking. Plus, first draft, only draft is unlikely to be satisfactory.

4. Rating Matrix
I Read & Discussed the attached article Signature and Date	Rating (circle Rating Closest to your assessment
	2 1 0 Very Effective Effective Ineffective

5. Tape typed statement of “what I learned from the discussion” here. 50 word Max. Use 10 point Arial Font.

Econ concepts are important in everyday life and can be found in every decision one makes even choosing what road to travel.

Loreto Alonzi Economics through Samuel’s Telescope GSB 611 Fall 2010

October 7, 2010 Format for Extra Credit Essay

Economists exasperated President Truman. When he asked their opinion they would reply: “On the one hand this, on the other hand that.” Truman moaned “Give me a one-handed economist.” Life is complex: on the one hand is Truth and on the other Love. Holding both Truth and Love is essential.

On the one hand there is Truth. For Economists, truth involves working out scarcity’s implications especially those of scarcity’s children: opportunity cost, cost-benefit principle, and education.

Scarcity’s children are as real as gravity. You meet opportunity cost, every Saturday night — do I go out with the group or with my significant other? If you go with the group, you forego being with your significant other (and vice versa). That is opportunity cost! What you forego when you choose. So how does one choose well? Benjamin Franklin suggested: take a piece of paper, list the positives on the left and negatives on the right. Then strike the balance. If benefits exceed costs, do it. If not, don’t. Ben captured the kernel of the Cost-Benefit principle and the miserly Scrooge core of economics the “Economic Person Paradigm”.

For me another important part of truth in Economics is education. I do not teach economics. I tell stories. Tell stories to draw out from students what is within them. I educate—e for out and duco for lead, e-duco or lead out. For me the truth in economics lies in education facilitating each student’s grasp of economic principles. I assist students as they work to grasp and apply economic principles in their decisions. As they apply the Cost-Benefit principle better, fewer resources are wasted, the burden of scarcity is lightened and they participate in creating of a just, humane world.

On the other hand there is Love. Scrooge is the image of the miserly “Economic Person” comparing costs and benefits heartlessly. So what’s love got to do with Economics?

Everything! Everything as one realizes that the Sun warming us, the air inspiring us, the rain refreshing us, and the earth feeding us were not made by us. In contemplating the origins, one realizes that they are from the creating esse sourcing all, from Love.
Love transforms the anthropology of the Economic Person Paradigm. No longer is the “Economic Person” the beginning and end deciding based on its me-myself-and-I. Rather the “Economic Person” is a creature emerging from source and re-merging with source. He/she is a steward of resources entrusted by source, esse, love. Native Americans realized this stewardship by choosing a course of action only if it is good for seven generations. Seven generations requires us to choose wisely. Since scarcity and opportunity cost are ever present, effective stewardship-decision-making requires learning and utilizing the Cost-Benefit principle effectively. Now, however, the goal is no longer satisfying the me-myself-and-I but rather stewarding.

The both-Love-and-Truth of DU’s motto Caritas et Veritas is the core of Economics. Caritas is Latin for Love. Not the carnal experience of the song “What’s Love Got to Do with It” but rather limitless self giving. John writes (1 John 4:16): “God is love and those who abide in love abide in God, and God abides in them.” So Caritas is one resonance with God. At DU, the rose symbolizes Caritas and the heart. Veritas is the Latin for truth. John’s Gospel (14:6) quotes Jesus: “I am the Way, the Truth, and the Life. No one can come to the Father except through me.” So Veritas is another resonance with God. At DU the candle symbolizes Veritas and the mind.

The Sisters did not choose the easy path of either/or—either Veritas or Caritas. For DU’s motto they chose both/and—both Caritas and Veritas. Timothy Radcliffe O.P. stresses the significance of both/and. Both/and is the dynamic tension between forces, the dialogue that keeps us properly headed, resonating with God. Without Truth, Love can devolve into coddling or a second hand emotion. Rigorous pursuit of Truth prevents love from devolving. Without Love, Truth could be corrupted to temporal power’s wants. Overflowing love expressed in compassionate service prevents corruption of Truth.
Great economists also embrace both/and. Adam Smith [The Wealth of Nations. (NY: Alfred A. Knoph, 1991), page 289] while championing the individual’s natural liberty, also requires government to restrain liberty which might endanger all society’s security. Smith rejects either individual or society choosing both/and. Alan Blinder’s book title puts well the challenge of economics: Hard Heads, Soft Hearts: Tough-minded Economics for a Just Society. That is Caritas et Veritas in action!