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Microeconomics

Click on the underlined name of the video to play the video on YouTube.
*FILE* Means that there is an associated file located under "Files" in the left sidebar.  If there isn't a name of the file listed, it will be the same as the video name (or obvious).  If you see me use an Excel file, notes (bullet points or definitions), a data set or Maple file, or anything else that you would find useful that is not available, please let me know. Chapter Correlation Guide for Bade/Parkin
Introductory Micro:
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 ReviewA quick review of graphing lines, crucial for economics.
Opportunity Costs and Budget LinesAn intro to the trade-offs illustrated with Budget Lines, showing Opportunity Cost as a Slope.
Opportunity Cost & PPFa
Plotting production possibilities frontier, calculating opportunity costs, and discussing why the PPF is bowed outward (concave to the origin).
Opportunity Cost & PPFbContinuation of above.
Comparative advantage and trade example. Opportunity cost, absolute advantage, gains from trade.
Laissez-Faire and Adam SmithA discussion of Market versus Command Economies, Command-type goods in the US, and Adam Smith.
Circular FlowA 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 ShiftsA graphical look at equilibrium, shortages, surpluses, and shifts in equilibrium
Supply/Demand Graphing ASupply and demand using equations, algebra, and graphing. Equilibrium AND out of equilibrium situations like price floors/ceilings.
Supply/Demand Graphing BContinuation 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 ExampleWe 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: IntroThe 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 ExternalititesUsing supply and demand, we look at the impact of a positive, or benefit externality on the market.
Analyzing Negative ExternalititesUsing 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 AThis 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 BContinuation of Part A above.
Demand CS PS CMore 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 D2Second half of production quota analysis.
Demand CS PS EAnalysis of a price ceiling, calculating CS PS and DWL.
Demand CS PS FAn 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 G1Analysis of an Excise Tax: Shift of Demand, Consumer Surplus, Producer Surplus, and Deadweight Loss: Part 1.
Demand CS PS G2Continuation of Excise Tax example above.
Tax Incidence AgainAnother example of analyzing an Excise tax, with focus on Incidence.
Tax Incidence Algebra StyleSomeone asked to see the algebra behind tax incidence: Optional but fun.
Marriage PenaltySince we are talking taxes, here is an example of how the marriage penalty works.

Marriage Penalty FairnessContinuing 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 AAn introduction to the concept of elasticity, price elasticity of demand.
Elasticity B1Simple examples calculating and discussing elasticities.
Elasticity B2More simple examples calculating and discussing elasticities.
Elasticity B3Another 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 DElasticities and Total Revenue along a Linear demand function.
Elasticity ECalculating Point Elasticity of Demand


Intro Micro Five: Basic Utility Theory
Budget LinesA focus on Budget Lines, or "Consumption Possibilities Curves"
Basic Utility MaximizationLooking at marginal utility per dollar to maximize utility. 


Intro Micro Six: Income Inequality and Poverty
Lorenz Curves and Gini CoefficientsIn 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 EqualSome good reasons why some people make more than others, and a look at the "Gender Pay Gap" in the US.
 PovertyHow to define poverty, and how this developed in the US. Some problems with our methods, who is more likely to be in poverty, and some government 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.


Intro Micro Seven: Analysis of Cost and Production
Cost and Production OverviewLONG, 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 1aThe first video analyzing cost and production: Production function, marginal cost, fixed cost, variable cost, and productivity.
  
Cost and Production 1bSecond part of lecture 1: Marginal returns versus returns to scale.
Cost and Production 2Using 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 3bSecond half of implicit/explicit accounting/ economic. 
Cost and Production 4aUsing 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 4bPart 2 of using ATC and MC, etc.
Cost and Production 5Looking 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 6In 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 7Now, we look at how changes to the market such as excise taxes or license fees can affect the market equilibrium.
Cost and Production 8An introduction to analyzing a monopolist's decisions using supply and demand lines. Marginal cost=Marginal Revenue!
Cost and Production 8bSome more details about monopoly analysis continuing the previous video.
Cost and Production 9We 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 ASimultaneous Games and Nash Equilibria
Game Theory BSimultaneous Games and Nash Equilibria and Dominant Strategies
Game Theory CSequential 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 EThe Centipede Game! And another large simultaneous/sequential game is analyzed.
Mixed Strategy Nash EquilibriaAdvanced 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?
  


Intermediate Micro:
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 & Microeconomics
Here we review derivatives of polynomials, and the interpretation as a slope, or marginal.
More on Partial Derivatives 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 DemandsHere 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.
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.
   
  


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.
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!
Advanced consumer theory by hand 1: Marshallian and Indirect 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 journeyIn 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 stepsAfter 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!
CES Functions: Const. Elasticity of Subs. An introduction to elasticity of substitution, and everything you could ever want to know about CES functions. Constant Elasticity of Substitution.
CES Utility: Analytical Solution MarshallianIn 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 UtilityHere we take the Marshallian Demands derived previously, and derive the Indirect Utility Function, completing the earlier video about Analytical CES Utility Analysis
Analytical Consumer Theory: Cobb Douglas and Perfect ComplementsNo 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 TaxHere we derive the compensating variation for a tax on the Consumer with a necessary Subsistence level for X above.
  

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 ProblemsHere we see how taxes and a forced saving program affect utility and decisions.
Risk Aversion and Expected UtilityAn overview of Risk aversion, visualizing gambles, insurance, and Arrow-Pratt measures of risk aversion.
Principal Agent Problems: Moral Hazard Part 1We 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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