Introductory Micro (Shorter Videos): In my course we focus heavily on graphing, calculation, and interpretation. Intro Micro One: Graphing & Opportunity Cost | What is Economics? | A brief overview to introduce the field of Economics. What is the foundation, and what is the difference between Micro and Macro? | | Graphing Review | A quick review of graphing lines, crucial for economics. | | Opportunity Costs and Budget Lines | An intro to the trade-offs illustrated with Budget Lines, showing Opportunity Cost as a Slope. | | Marginal Cost -Benefit Decision Making | Example Homework Problem, and how to think about this process. | Opportunity Cost & PPFa
| Plotting production possibilities frontier, calculating opportunity costs, and discussing why the PPF is bowed outward (concave to the origin). | | Opportunity Cost & PPFb | Continuation of above. | | Comparative advantage and trade example. Opportunity cost, absolute advantage, gains from trade. | | Laissez-Faire and Adam Smith | A discussion of Market versus Command Economies, Command-type goods in the US, and Adam Smith. | | Circular Flow | A brief look at the Circular Flow Diagram |
Intro Micro Two: Graphing Supply and Demand| Supply/Demand Intro 1 | What is demand? Demand Schedule? | | Supply Demand Intro 2 | A Focus on Supply and factors that can shift Demand and Supply | | Equilibrium and Shifts | A graphical look at equilibrium, shortages, surpluses, and shifts in equilibrium | | Supply/Demand Graphing A | Supply and demand using equations, algebra, and graphing. Equilibrium AND out of equilibrium situations like price floors/ceilings. | | Supply/Demand Graphing B | Continuation of above. | | Market Failures: Public and Private Goods | Here we discuss the characteristics of public goods and the importance of the idea. We define Rivalry and Excludability, discuss the free rider problem, and give some examples of each type of good. | | Public and Private Goods: Numerical Example | We do a typical homework problem comparing the social demand for public goods with private goods. Using marginal benefits, we determine the optimal amount to buy at each price. | | Producer and Consumer Surplus: Intro | The fundamental idea of total surplus, what does it mean? | | What is a Deadweight Loss? | Here we talk about the fundamental idea of deadweight loss: Something that causes a loss of total surplus, consumer + producer surplus. | | Analyzing Positive Externalitites | Using supply and demand, we look at the impact of a positive, or benefit externality on the market. | | Analyzing Negative Externalitites | Using supply and demand, we look at the impact of a negative, or cost externality on the market. | | | |
Intro Micro Three: Graphing Producer and Consumer Surplus: Analysis with Supply/Demand| Demand CS PS A | This was my very first video. Note the horrible drawing program! Graphing demand and supply, calculating Consumer and Producer Surplus, total revenue, total benefit, deadweight loss. | | Demand CS PS B | Continuation of Part A above. | | Demand CS PS C | More practice graphing and calculating CS PS VC TR TS and TB with equations P=12-.5Q and P=2+2Q. | | Demand CS PS D1 | First half of an analysis of a production quota and deadweight loss. | | Demand CS PS D2 | Second half of production quota analysis. | | Demand CS PS E | Analysis of a price ceiling, calculating CS PS and DWL. | | Demand CS PS F | An overview comparison of the results in Videos D1, D2, and E, so that you can see the big picture. The deadweight loss from the price ceiling of 4 is the same as with the production quota of 2. | | Demand CS PS G1 | Analysis of an Excise Tax: Shift of Demand, Consumer Surplus, Producer Surplus, and Deadweight Loss: Part 1. | | Demand CS PS G2 | Continuation of Excise Tax example above. | | Tax Incidence Again | Another example of analyzing an Excise tax, with focus on Incidence. | | Tax Incidence Algebra Style | Someone asked to see the algebra behind tax incidence: Optional but fun. | | Marriage Penalty | Since we are talking taxes, here is an example of how the marriage penalty works.
| | Marriage Penalty Fairness | Continuing the above video, with a focus on marginal tax rates and ideas of tax fairness. | | Review 1 | One more set of practice exercises for CS, PS, DWL, etc. In pt. 1 we do a basic situation and ceiling. | | Review 2 | In part 2 we do a quota and Excise Tax. |
Intro Micro Four: Elasticities| Elasticity A | An introduction to the concept of elasticity, price elasticity of demand. | | Elasticity B1 | Simple examples calculating and discussing elasticities. | | Elasticity B2 | More simple examples calculating and discussing elasticities. | | Elasticity B3 | Another lecture on interpreting price elasticity of demand, income elasticity of demand, and cross-price elasticity of demand. Examples using alcoholic beverages. | Elasticity C
| How to calculate percent changes using the midpoint method for elasticities. | | Elasticity D | Elasticities and Total Revenue along a Linear demand function. | | Elasticity E | Calculating Point Elasticity of Demand
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Intro Micro Five: Basic Utility Theory
Intro Micro Six: Income Inequality and Poverty | Lorenz Curves and Gini Coefficients | In this video I introduce the ideas of the Lorenz Curve and Gini Coefficient for measuring income inequality. I also describe some difficulties with using it as a way to track income inequality over time. | | Why Incomes Aren't Equal | Some good reasons why some people make more than others, and a look at the "Gender Pay Gap" in the US. | | Poverty | How to define poverty, some problems with our methods, who is more likely to be in poverty, and some policies that are proposed to try to alleviate poverty and income inequality. I close with a discussion of the extreme world poverty in many parts of the world. | | Discrimination | A brief look at discrimination from an economist's perspective, with a look at some historical examples from 100 years ago to compare with today. Handout |
Intro Micro Seven: Analysis of Cost and Production
| Cost and Production Overview | LONG, but comprehensive overview of cost tables, ATC, AVC, MC, break even price, shut down price, and how to maximize profits in pure competition. File: Cost Overview.pdf | | Cost and Production 1a | The first video analyzing cost and production: Production function, marginal cost, fixed cost, variable cost, and productivity. | | | | | Cost and Production 1b | Second part of lecture 1: Marginal returns versus returns to scale. | | Cost and Production 2 | Using a total cost table to calculate marginal cost, average total cost, average variable cost, etc. and what these numbers mean. | | Cost and Production 3a | An example discussing implicit and explicit costs, and accounting versus economic profit. Part 1. | | Cost and Production 3b | Second half of implicit/explicit accounting/ economic. | | Cost and Production 4a | Using the Average total cost, average variable cost, and marginal cost curves to make decisions about production and profit or loss. Part 1. | | Cost and Production 4b | Part 2 of using ATC and MC, etc. | | Cost and Production 5 | Looking at how things change in the long run. Also, a brief look at the LRAC, or long run average cost curve as you change the SCALE or size of your business. | | Cost and Production 6 | In this video we use the marginal cost curve for ONE perfectly competitive firm to derive the Market Supply curve for 100 small firms. *File* Cost and Production.xlsx | | Cost and Production 7 | Now, we look at how changes to the market such as excise taxes or license fees can affect the market equilibrium. | | Cost and Production 8 | An introduction to analyzing a monopolist's decisions using supply and demand lines. Marginal cost=Marginal Revenue! | | Cost and Production 8b | Some more details about monopoly analysis continuing the previous video. | | Cost and Production 9 | We look at the same cost table from "Cost and Production 4, 6 and 7", but we look at how we can analyze and estimate the effects of a monopoly takeover in a perfectly competitive market. |
Intro Micro Eight: Game Theory | Game Theory A | Simultaneous Games and Nash Equilibria | | Game Theory B | Simultaneous Games and Nash Equilibria and Dominant Strategies | | Game Theory C | Sequential Games: A quick review of simultaneous games, and a first look at sequential games, backward induction, and subgame perfect equilibria. | | Game Theory D | Dating Game: Another example of solving a simultaneous game and its sequential counterpart. | | Game Theory E | The Centipede Game! And another large simultaneous/sequential game is analyzed. | | Mixed Strategy Nash Equilibria | Advanced Material! How to calculate a mixed strategy Nash Equilibrium for a game with no Pure Strategy Nash Equilibrium. | | Evolutionary Stable Strategy (ESS) | Advanced Material: Here I discuss the basic idea used in biology, an Evolutionary Stable Strategy: When is an equilibrium behavior resistant to a mutation or invasion? | | Moral Hazard and Adverse Selection | A discussion of Moral Hazard vs. Adverse Selection, using Rasmusen's terminology of "Hidden Action" vs. "Hidden Information" |
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My intermediate microeconomics course uses a LOT of calculus and algebra. Calculus/Math review videos are below!
Intermediate Micro: Math Review
| Intermediate Micro Math: Exponents Review |
A quick review of all of the exponents rules, including fractional exponents and negative exponents, and how to simplify them. |
| Equations with strange exponents |
Solving equations like x0.4 = 10 on your calculator. |
| Level Curves (Indifference, IsoQuants...) Curves, … |
How to graph a level curve, or parametric curve. If Q=x*y=4, how do we graph this curve. Useful for isoquants and indifference curves in Intermediate Micro. |
| Level Curves Visualization |
More of the above with better visualization, with a at z=4. *FILE LevelCurvesintro.wxm* |
| Basic Derivatives & Micro: NEW |
Here we review derivatives of polynomials, and the interpretation as a slope, or marginal.
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| Partial Derivatives & Micro (NEW) | A look at partial derivatives, and a little bit about how we can use & interpret them in Econ. | | Basic Derivatives & Micro (OLD) | Here we review derivatives of polynomials, and the interpretation as a slope, or marginal. | | More on Partial Derivatives (Old) | I review the idea of a one-variable derivative again, then discuss partial derivatives in more depth. |
Intermediate Micro: Basic/Review Material
| Equilibrium and Comparative Statics: Basics |
Example of calculating equilibrium of Supply and Demand using algebra and graphing, and using "comparative statics": examining what changes when an exogenous variable changes the equilibrium. |
| Add Linear Demands |
How to add two linear demand functions together to get a total demand function. |
| Adding Nonlinear Demands | Here we add two Cobb-Douglas Demands and plot them using Maxima *File maxima add cd demands.wxm |
| Demand, Marginal Revenue, and Profit |
Another example of looking at demand, along with marginal revenue. How separating markets can increase profits. |
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Here I discuss a problem similar to one in Jeffrey Perloff's Text: How
could we model how drilling in ANWR could help keep prices down when a
supply shock happens. |
| Elasticity and Tax Incidence |
A brief review of tax incidence, and of how price elasticity of demand and supply can predict the incidence of a per unit tax. |
| Demand and Elasticity 1 | Given two points on a demand curve, find the equation and calculate elasticities. |
| From Elasticities to Linear Supply and Demand |
Here I show how to take price elasticities of supply and demand to derive plausible linear functions to represent them. |
Demand elasticity back of envelope
| Using the price elasticity of demand, price and quantity, we approximate the demand function for Jack Daniels whiskey in Virginia |
Intermediate Micro: Intermediate Surplus and deadweight loss analysis
| Cost Functions, Marginal Cost, and Perfect Competition | Here is a basic look at cost functions, and using calculus to figure out how many units a perfectly competitive firm should produce, and its relationship to Producer Surplus. |
| Ceiling Worst Case Scenario |
With a price ceiling, what you normally calculate in Introductory Micro is the "Best Case Scenario". Let me show you the Worst Case Scenario, or "Least efficient Outcome". |
| Quick Calculus for Economics 1: Derivatives and Integration |
Introduction and integration to find variable costs, total benefit, consumer surplus, and producer surplus. |
| Quick Calculus for Economics 2 |
Integration to find variable costs, total benefit, consumer surplus, producer surplus, and deadweight loss with a production quota. |
| Maximum Tax Revenue: Take your skills to the next level |
In this video we derive the tax-revenue maximizing per-unit tax. First with a graph, then with example equations, then derive the analytical solution. Extremely fun way to see mathematical economics in action! Handout |
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Intermediate Micro: Preferences, utility functions, and Indifference Curves
| Utility 1 |
A look at a total and marginal Utility Function with only one variable.
Using calculus, we look at what a marginal function means. |
| Utility 2a *File utility.wxm* |
Visualizing a 3d utility surface, thinking about marginal utility. In
this video we only do visualization so that you can better understand
the calculus that comes next. |
| Utility2B: Marginal Utility and MRS |
Using calculus to find marginal utility and marginal rate of
substitution for a utility function, looking at indifference curves. |
| Utility2C: MRS for Cobb Douglas |
I show a trick for finding the Marginal Rate of Substitution function if
you have a cobb Douglas utility function. Works for MRTS (marginal
rate of technical substitution) as well. |
| Indifference Cures: Different Types |
We look at intuition, graphs, functions of several types of preferences people could have: Cobb Douglas, Quasilinear, perfect complements/substitutes, bads, and goods we could take or leave. |
A few points about Indifference Curves
| Some of the finer points: Why they can't slope upwards (with two GOODS), cross, be thick, there are infinitely many, and a review of MRS. |
| Utility3: Maximizing Utility with Budget Constraint |
How to solve a constrained optimization problem with a utility function
and budget constraint; maximizing utility. Just set the slope of the
budget line = slope of indifference curve! |
| Quasilinear Utility Maximization |
Instead of the usual Cobb-Douglas, here I illustrate maximizing utility with a quasi-linear utility function. |
| Equal MU per $, or Bang for Buck rule |
Graphs, calculus, numbers, and discussion to explore details of the =equal marginal utility per dollar maximization condition. |
| Utility Maximization and Demand |
Here we demonstrate how to show where demand curves come from, by doing several utility maximization problems. |
| U Max and Demand | New Version! Also includes Price Consumption and Income Consumption Curves Download Handout |
| The Dual Problem |
Here we look at the DUAL problem to utility maximization. Instead of
getting the highest utility with a given budget, here we find the
cheapest way to attain a certain level of utility. |
| Income and Substitution Effects |
If you already know how to maximize utility, this video shows you how to find income and substitution effects using the Slutsky Equation (Hicks' Decomposition). |
| Income/Subs Effects, Price Decrease |
Here we look at a Cobb-Douglas utility function with a price decrease. |
| Overview: Inc/Subs/ Compensating/ Equiv. Variation. |
This is an overview of graphing and interpretation of income and substitution effects, and compensating and equivalent variation. A focus on graphing and interpretation, rather than on calculation. *File* INCSUBS INTERPRET |
| Why Subsidies Suck! | Using Consumer Theory to show why subsidies are inefficient.
*File* Subsidies Suck.pdf | | Yet Another Example | Utility Maximization, Price Change, Income and Substitution Effects, and Compensating Variation file: income.subs.another.example.pdf |
Consumer Theory: More Advanced Topics
| Cobb Douglas Exponents: Do they have to Sum to 1? | The answer is No, but you CAN represent any CD Utility function with exponents summing to 1: Here's how! |
| Lagrange Multiplier Method |
Here is a different, more powerful method many use to solve constrained optimization problems. I show how it is really the same thing, with one twist. |
| Handout: Advanced Consumer Theory on One Page |
Here I give an overview of a handout explaining the relationships between Marshallian Demand, Hicksian, Indirect, Expenditure functions, Money Metric Utility, Roy's Identity, Shephard's Lemma, and a couple of other tricks.
*File* consumer theory.pdf |
| Advanced Topic: Roy's Identity, Indirect Utility, Hicksian Demand, Expenditure Functions |
Here I use the Lagrange Multiplier method to derive some advanced ideas in Micro-- using a simpler method than presented in most textbooks. I use Maple to do the math for us, but explain what we are doing as we go, and why.
*File* marshall hicks.mw |
| Consumer Theory Expression Simplification |
Response to a Viewer Question about how to simplify the expression for the Expenditure Function in my Consumer Theory handout. The answer is: Find the Common Denominator! |
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Advanced consumer theory by hand 1: Marshallian and Indirect
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By request: Deriving Marshallian and Indirect utility functions for a Cobb-Douglas utility function, and then using Roy's Identity. |
| Marshallian, Indirect, and Roy's: One more time | Here is another example of taking a Cobb-Douglas Utility Function, deriving the Marshallian demands, deriving Indirect Utility Functions, and then applying Roy's Identity to get the Marshallian Demands back. |
| Advanced Consumer Theory by Hand 2: The Hicksian Demand |
By request: Looking at another part of my Consumer Theory Handout, a viewer asks to see how to set up and solve for Hicksian (Compensated) Demand Functions. |
| Slutsky Equation Derivation: Preparing you for the journey | In this video we pull out the "BIG GUNS": If you want to see how you can derive the Slutsky Equation, you need to review some high-powered math: Lagrangians, total differentials, and Cramer's Rule. Here we set the stage for the next video. | | Slutsky Equation Derivation: Going through the steps | After you have armed yourself with the mathematical tools in the previous video, you are ready to take on the derivation of the Slutsky Equation. Here we go! | | Slutsky vs. Hicks: Income/ Substituion Effects ++ | Slutsky vs. Hicks for Income and Substitution Effects. Also discuss Compensation and Equivalent Variation, and the connection to Laspeyres and Paasche price indices. Handout | | CES Functions: Const. Elasticity of Substitution | An introduction to elasticity of substitution, and everything you could ever want to know about CES functions. | | CES Utility: Analytical Solution Marshallian | In this video I take a generalized CES Utility function and derive the analytical solutions for the Marshallian Demand Functions. | | CES Utility Max Part 2: Indirect Utility | Here we take the Marshallian Demands derived previously, and derive the Indirect Utility Function, completing the earlier video about Analytical CES Utility Analysis | | CES 3: Show that Indirect is Homogenous | We show that Indirect Utility Function for CES is Homogenous Degree 0 in prices and Income. | | Analytical Consumer Theory: Cobb Douglas and Perfect Complements | No numbers! How to derive demand functions with analytical solutions. I show some common tricks for simplifying complicated expressions. | | Analytical Consumer Theory: Cobb Douglas with Subsistence Level:Pt 1 | Here we assume that if you don't get at least "d" amount of x, you'll get no utility! How does this affect the demand and indirect utility functions? | | Subsistence Part 2: Compensation for Tax | Here we derive the compensating variation for a tax on the Consumer with a necessary Subsistence level for X above. | | Elasticity for Marshallian Demand Functions | Here we get analytic solutions for the Marshallian Demands for Cobb Douglas and Perfect Complement Utility Functions (Own Price, Income, and Cross Price) |
Utility Maximization: Other Interesting Cases
| Two Period (Inter-temporal) | We go through the basic idea of intertemporal utility maximization with two periods. We solve a basic problem with a Cobb-Douglas Utility function and an interest rate. | | Intertemporal: Additional Problems | Here we see how taxes and a forced saving program affect utility and decisions. | | Risk Aversion and Expected Utility | An overview of Risk aversion, visualizing gambles, insurance, and Arrow-Pratt measures of risk aversion. | | Principal Agent Problems: Moral Hazard Part 1 | We look at a model with the potential for Moral Hazard (Hidden Actions that might hurt the Principal), but first assume that you
can observe the effort of the agent. We solve for the optimal contract in the next video. | | Principal Agent Problems: Moral Hazard Part 2 | In this video we solve for the optimal contract when effort is unobservable, and take a quick look at a state-space diagram. | | Allais' Paradox | | | Ellsberg Paradox | | | St. Petersburg Paradox | | | | |
Intermediate Micro: Cost Minimization and Production Functions
| MRTS and Elasticity of Substitution |
Production functions, non-economic regions, interpreting marginal rate of technical substitution, perfect substitutes and perfect complements (Leontief production functions), and the elasticity of substitution measure. |
| IsoQuants and Returns to Scale |
Here we look at the definition of returns to scale, isoquants, and Cobb-Douglas Production Functions. As usual, I give you the shortcuts along with the intuition and math. I briefly describe the difference between RTS and marginal returns. |
| Production Theory: Cost Min 1 |
*File* IM Production Theory Example
Returns to scale, input demand functions, marginal rate of technical substitution, isocosts, isoquants,etc. SR vs. LR cost minimizaion. |
| Production Theory: Cost Min 2 |
Continuation of above, Returns to scale, input demand functions, marginal rate of technical substitution, isocosts, isoquants,etc. |
| A interesting discussion of a boring problem |
Given L, K, and the exponents, solve for the constant. Why would we want to do this? Here are some things to think about.
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