You're going to knit flat, sounds like it's a shawl; the circ is just to hold a lot of stitches, so do the rows as written.
You increase in the second st on Row 1. P1, then in the next st purl, but don't slip it off the needle, wrap your yarn for the YO, then purl again. Then purl the 3rd st.
Row 2 is similar - k2, then do k1, yo, k1 in the 3rd st, and knit the last 2 sts.