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Opportunities and What They Cost
One of the fundamental concepts in economics is that of opportunity cost. In order to understand opportunity cost, though, we need to take a step back and think about costs in a more general way. The...
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Scribbling in the Margins
3. Rational people think at the margin. That’s one of Mankiw’s Ten Principles of Economics. (#3, in fact). What does it mean? The usual definition of “marginal” is “additional.” In other words, the...
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Perfectly Competitive Markets
When solving economic problems, the type of firm you’re dealing with can lead you to use different techniques to figure out the firm’s rational choice of action. This week, I’ll set up a thumbnail...
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Shockingly, Economists Price Things Intelligently
I was excited to see that there’s a new edition of Recursive Macroeconomic Theory by Lars Ljungqvist and the Nobel Prize winning Tom Sargent. I was even more excited to see prices starting to fall into...
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Uncertainty Over Time (Lords)
The previous post introduced a problem that arose in the Doctor Who 50th Anniversary special in which uncertainty was a core element. To explore that problem in depth, we’ll need some tools to work...
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The Good and Bad of Goods and Bads
When students first hear the word “goods” pertaining to economic goods, they sometimes find it a little funny. When they hear some sorts of goods called “bads,” they usually find it ridiculous. Let’s...
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Elasticity (SPROING~!)
When we think about elasticity in the real world, we often think about the properties of things like rubber bands or the waists of sweatpants. If a solid has high elasticity, that means it’s very...
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Elasticity and Demand
The price-elasticity of demand measures how sensitive consumers are to changes in price. There are two primary formulas for that. Most commonly, introductory courses will use , where means the...
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Price Discrimination
I wear my hair short. Like, really short – it’s buzzed on the sides and scissor-cut on top, so that it’s low-maintenance, and I trim my own beard using a storebought clipper. My father-in-law does the...
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How do producers charge different consumers different prices?
Price discrimination is the act of charging different consumers different prices based on how much they’re willing to pay. There are a few different forms of price discrimination, and it can be...
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