Published on 8 Feb 2015
In this video, we discuss how markets link people and places all over the world. We’ll take a look at production and consumption markets and, importantly, the role that prices play in it all. Following up on our example of a rose, we take a look at other global products such as the Apple iPhone. Where is the iPhone made? It’s produced by thousands of people all over the world, working in cooperation in order to make one product that many of us enjoy. Join us as we observe the invisible hand in action.
May 28, 2015
Markets Link the World
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May 25, 2015
Wage Subsidies
Published on 3 Feb 2015
What’s the difference between a wage subsidy and a minimum wage? What is the cost of a wage subsidy to taxpayers? We take a look at the earned income tax credit and how it affects low-skilled workers. We also discuss Nobel Prize-winning economist Edmund Phelps’ work on wage subsidies.
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May 14, 2015
Subsidies
Published on 27 Jan 2015
What is a subsidy? A subsidy is really just a negative or reverse tax. Instead of collecting money in the form of a tax, the government gives money to consumer or producers. In this video, we look at the subsidy wedge and who benefits the most from different subsidies.
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May 12, 2015
Tax Revenue and Deadweight Loss
Published on 27 Jan 2015
Why do taxes exist? What are the effects of taxes? We discuss how taxes affect consumer surplus and producer surplus and discuss the concept of deadweight loss at length. We’ll also look at a real-world example of deadweight loss: taxing luxury yachts in the 1990s.
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May 11, 2015
Who Pays the Tax?
Published on 27 Jan 2015
Who bears the burden of a tax? Buyers or sellers? Why is it that the more elastic side of the market pays a smaller share of a tax? Again, we’ll apply what we know to the example of Social Security taxes and also look at the health insurance mandate as a part of the Affordable Care Act. Who pays for the mandate? The employers or the workers? We’ll also look at supply and demand of labor. Is the demand for labor more elastic than the supply?
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May 7, 2015
Commodity Taxes
Published on 27 Jan 2015
In this video we cover taxes and tax revenue and subsidies on goods. We discuss commodity taxes, including who pays the tax and lost gains from trade, also called deadweight loss. We’ll take a look at the tax wedge and apply what we learn to the example of Social Security taxes.
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May 6, 2015
Applications Using Elasticity
Published on 27 Jan 2015
In this video, we take a look at real-world applications of elasticity, using the examples of slave redemption in Sudan and and the effects of gun buyback programs in the U.S.
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May 4, 2015
Elasticity and Slave Redemption
Published on 27 Jan 2015
Beginning in 1993, Sudan entered into a civil war, with one of the worst parts being that many people were kidnapped and sold into slavery. Humanitarian groups traveled to Sudan to redeem slaves by buying them out of slavery. Is this good policy? Did it work out, or make it worse? Let’s use elasticity to analyze the situation.
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April 30, 2015
Elasticity of Supply
Published on 27 Jan 2015
When is a supply curve considered elastic? What are determinants of elasticity of supply? Let’s compare Picasso paintings and toothpicks. Which has an elastic or inelastic supply? For which good could you increase production at a low cost? We also go over how to calculate the elasticity of supply, including using the midpoint formula.
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April 27, 2015
Calculating the Elasticity of Demand
Published on 27 Jan 2015
Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price. In this video, we go over specific terminology and notation, including how to use the midpoint formula. We apply elasticity of demand to the war on drugs, and more broadly to the prohibition of a good when it has an elastic demand.
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April 25, 2015
Elasticity of Demand
Published on 27 Jan 2015
How much does quantity demanded change when price changes? By a lot or by a little? Elasticity can help us understand this question. This video covers determinants of elasticity such as availability of substitutes, time horizon, classification of goods, nature of goods (is it a necessity or a luxury?), and the size of the purchase relative to the consumer’s budget.
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April 20, 2015
Supply and Demand Terminology
Published on 2 Jan 2015
What is the difference between a change in demand and a change in the quantity demanded? The terminology can be confusing — but we’ll provide some clarity in this video. In short, a change in demand refers to a shift in the demand curve — caused by a number of factors such as income, population, etc. A change in quantity demanded refers to a movement along a fixed demand curve — caused by a change in price.
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April 19, 2015
Does the Equilibrium Model Work
Published on 2 Jan 2015
Does the equilibrium model work? Nobel Prize winner Vernon Smith conducted experiments testing this model and found that time and time again, the model did indeed work. This video takes a look at Smith’s evidence and analyzes other instances where market conditions shift either the demand or supply curve, and the equilibrium model comes into play.
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April 16, 2015
Exploring Equilibrium
Published on 2 Jan 2015
In this video, we’ll review equilibrium in the adjustment process, showing that the equilibrium price is the only stable price. Then we’ll take a look at equilibrium quantity, where quantity demanded is equal to quantity supplied, and how this plays out in a free market economy that seeks to maximize gains from trade.
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April 14, 2015
The Supply Curve Shifts
Published on 2 Jan 2015
This video explores factors that shift the supply curve. How do technological innovations, input prices, taxes and subsidies, and other factors affect a firm’s costs and the price at which the firm is willing to sell a good? By answering these questions we have a better idea of how the supply curve will shift. This video walks you through examples and scenarios that illustrate this concept.
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