jQuery with js code fails

jQuery with js code fails

Newbie here. I must be doing something basic.... wrong.
 
Windows XP, SPII; I.E. 7
 
Simple load of jQuery, as shown in the "How jQuery Works" doc works fine. But as soon as I add a basic function, as show in the doc, it fails on me. IE says "Object expected" in char 1 on this line:
      $(document).ready(function(){
 
I am not familiar with that construction; it is over my head. FireFox loads the page without error, but does not execute the JavaScript code.
 
It must be something simple. What am I doing wrong?
 
Thanks.
 
 - m