Archive for the ‘Microeconomics’ Category

When Journalists Who Write about Prices Forget Opportunity Costs


It’s conventional wisdom: they’re trying to rip you off by overcharging you. But you can’t calculate the true cost of providing any cost or service without including opportunity costs. When Sally French says, “And you’re definitely better off making pizza at home,” I hope my students are asking as they read: “Really? Even people with high opportunity costs of making their own pizza?”


Megan McArdle on Reducing Inequality

March 30, 2017 Leave a comment

Some  interesting observations here related to things we’ve been discussing in the Intermediate Microecomins class this past class session: discrimination, marriage as a way to fight poverty, role of government, etc.

Worth reading!

Categories: Microeconomics

If You Want Less of Something…

March 3, 2017 Leave a comment

tax it.

This article illustrates several things we talk about in the introductory and intermediate microeconomics classes: derived demand, tax incidence, and the relationship between price elasticity of demand and close substitutes.

I hope my students can read it and apply these concepts to what they read.

When We Get to Oligopoly…

October 13, 2016 Leave a comment

…remind me, students, of this news item. It’s a great example of the difficulty of getting members of a cartel to stick to their agreements to limit production in order to maximize total profits of the group.

Following yesterday’s latest IEA report which showed that OPEC production had hit an all time high, this morning OPEC released its own estimate of production by OPEC member nations for September and, not surprisingly, the latest report showed that in the month OPEC was supposed to be set on “cutting” production, the 14-nation group produced a whopping 33.39 million b/d crude in Sept., up 220k b/d from August.

Ten Principles of Economics Video Review

September 19, 2016 Leave a comment

This video will help freshman students review the text’s first chapter, Mankiw’s 10 principles of economics:

This is prepared for a U.S. classroom, so all the examples are from the U.S. Hopefully my students can think of examples from their own countries, too.

Categories: Microeconomics, Videos

I, Pencil

September 12, 2016 1 comment

A great video introducing economics from another prespective–that of wonder at the way markets actually work to deliver goods of great complexity with great efficiency.

I plan to show it in my Introduction to Microeconomics class this week.

Good Question!

June 22, 2016 Leave a comment


Things for my intermediate microeconomics students to ask themselves going into the final:

  • Can I graph the effects on equilibrium price and quantity of changes in supply and demand? Can I identify which events will shift which curve, and in which direction?
  • Do I understand the concepts of substitutes and complements? Can I use these concepts to analyze how markets will react to different changes?
  • Can I graph binding and non-binding price ceilings and floors? Do I understand how to measure shortages and surpluses on a graph?
  • Do I understand the properties of indifference curves? Can I recognize indifference curves for perfect substitutes and perfect complements?
  • Could I create a demand schedule?
  • Can I correctly graph a demand schedule, a supply schedule, a production function, a PPF, and a budget constraint line?
  • Do I understand the meaning and significance of the beauty premium, superstar phenomenon, in-kind transfers, bundles of consumption, derived demand, world price, small market assumption, tariff, tax incidence, the ultimatum game, asymmetric information, the signalling theory of education, hidden characteristics, hidden actions, moral hazard and marginal cost and benefit?
  • Do I understand the difference between price discrimination and racial discrimination? Between positive and normative statements? Between movement of the curve and movement along the curve?
  • Can I accurately calculate the slope of a demand curve or a budget constraint line?
  • Do I understand MPL and MRS?
  • Do I understand the difference between PPFs that are straight lines and PPFs that bow outwards?
  • Can I give examples of perfect (or nearly perfect) substitutes and perfect (or nearly perfect) complements?
  • Do I understand the difference between a shift in the budget constraint line and a pivot? Can I graph the effects of a price increase or decrease or an income increase or decrease on the budget constraint line? Can I show how this might change consumption preferences?
  • Do I know how to calculate the slope of a budget constraint line? Can I calculate the marginal rate of substitution between two points?
  • Do I understand the difference between substitution and income effects, and the substitution and output effects? Do understand what an isoquant curve is?
  • Can I graph diminishing marginal utility of income and evaluate “fair” prices for insurance?
  • Can I graph the trade-offs in consumption today and in the future? Do I understand why in some cases an increase in interest might increase savings, and in some cases decrease it? Could I graph that?



Categories: Microeconomics