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.
April 30, 2015
Elasticity of Supply
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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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April 13, 2015
A Deeper Look at the Demand Curve
Published on 2 Jan 2015
This video looks at both the horizontal and vertical methods for reading the demand curve, how demand curves shift, and consumer surplus.
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April 10, 2015
A Deeper Look at the Supply Curve
Published on 2 Jan 2015
What does the supply curve show us? This video takes a look at what we can tell from the supply curve about the behavior of sellers and quantities supplied at different prices. We’ll talk about producer surplus as well as factors that lead to an increase in supply and a decrease in supply — and we’ll provide a list of these important supply shifters.
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April 9, 2015
The Demand Curve Shifts
Published on 2 Jan 2015
How do increases or decreases in demand affect the demand curve? An increase in demand means an increase in the quantity demanded at every price. Similarly, a decrease in demand means a decrease in the quantity demanded at every price.
This video takes a look at some important factors that shift the demand curve, such as changes in population, changes in income, prices of substitutes, and changes in taste. We’ll look at real-world scenarios that cause a change in demand — like how the demand for batteries increases when a hurricane is expected, how our demand for inferior goods decreases when our income increases, and how the demand for hot dogs increases when the price of the complement, hot dog buns, decreases.
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April 8, 2015
The Equilibrium Price
Published on 2 Jan 2015
In this lesson, we investigate how prices reach equilibrium and how the market works like an invisible hand coordinating economic activity. At equilibrium, the price is stable and gains from trade are maximized. When the price is not at equilibrium, a shortage or a surplus occurs. The equilibrium price is the result of competition amongst buyers and sellers.
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April 7, 2015
The Supply Curve
Published on 2 Jan 2015
In this video, we explore the relationship between price and quantity supplied. Why does the supply curve slope upward? The supply curve shows how much of a good suppliers are willing to supply at different prices. For instance, oil suppliers in Alaska and Saudi Arabia face different costs of extraction, affecting the price at which they are willing to supply oil.
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April 6, 2015
The Demand Curve
Published on 2 Jan 2015
Why does the demand curve slope downward? The demand curve demonstrates how much of a good people are willing to buy at different prices. In this video, we shed light on why people go crazy on Black Friday and, using the demand curve for oil, show how people respond to changes in price.
Update, 16 June: Forgot to link to the very first video in the series … here.
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February 14, 2015
“I, Rose” and “A Price is Signal Wrapped Up in an Incentive”
Published on 8 Feb 2015
How is it that people in snowy, chilly cities have access to beautiful, fresh roses every February on Valentine’s Day? The answer lies in how the invisible hand helps coordinate economic activity, Using the example of the rose market, this video explains how dispersed knowledge and self-interested actors lead to a global market for affordable roses.
Published on 8 Feb 2015
Join Professor Tabarrok in exploring the mystery and marvel of prices. We take a look at how oil prices signal the scarcity of oil and the value of its alternative uses. Following up on our previous video, “I, Rose,” we show how the price system allows for people with dispersed knowledge and information about rose production to coordinate global economic activity. This global production of roses reveals how the price system is emergent, and not the product of human design.
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