Hi, welcome to unit one. In this unitwe're gonna develop some of the basicprinciples, tools and ideas underlying theoptimizing behavior of economic agentssuch as firms or consumers. The tools andprinciples that we will develop areextremely useful, because most economicmodels that we will study in this courseinvolve some sort of optimizing agent. Ifa consumer, a firm, or sometimes, even agovernment. We begin the course bystudying these principles of optimizingbehavior. Because, by mastering the ideasin this unit, you will be on your way tohave all of the tools and concepts thatyou need to successfully understand all ofthe other models that we will study in thecourse. Thus, it is really worthwhile toinvest in understanding the material inthis section really, really well. By theway, there is another motivation forstudying the material in this section. Ifyou're one of those students who dreams ofriches and of taking over the world, theprinciples of optimizing behavior that wewill start in this section will also teachyou how to become a more effectivedecision maker in your daily life. I wantto finish, this introduction, by makingseveral comments. That I urge you to takevery seriously because they are based,both on my commitment to help a studentunderstand this course, and on over adecade of experience in teaching thismaterial. First, a comment aboutpre-requisites, which you should take veryseriously. Basic understanding of calculusis absolutely necessary to be able tounderstand the course and to do well onit. This includes the ability to take thederivative of any function that I giveyou, of one variable and a deepunderstanding of what a derivative is. Ifyou have not taken the appropriate course,I urge you to go and take it first. Andthen come back and take this class. Whichwill be offered repeatedly in years tocome. For example, there is anoutstanding, absolutely outstandingUniversity Calculus course in the Courseraplatform at MIT. Second, in my experiencea non-trivi al fraction of the studentswho take this course find the first weekof the class very hard. This is not due toany inherent difficulty of the material orto any. Abstract math that you need toknow. It is due, however, to the fact thatmany students are not used to deal withmathematical notation in the way that most

economies do. Despite this, if you'refinding this first week difficult, I urgeyou to persevere. Why? Because in myexperience, the students who stick with itand work hard, often find, a couple ofweeks later, that the material in thefirst week, becomes very familiar, verynatural, very easy. And end up enjoyingthe course, tremendously. So stick withit. Don't give up in the first week, evenif you find this hard. Finally, don'tforget to take advantage, of the resourcesthat we have put together, in this course,to help you master the material. Inparticular, don't forget the practiceproblems for unit one, which will allowyou, to. Put in practice, the concepts andideas that we have been studying beforeyou have to attend the problem site. Allof these practice problems come withextremely detailed solutions that wouldcome, that you can use to improve yourunderstanding. In addition, many studentsfind the discussion part an extremelyuseful. Source of advice. And a good wayto handle questions answered, both by TAsand by other members of the class. Withoutmore preamble, let's do some economics.