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Evaluating Different Market Structures
Market structures, like perfect competition, monopoly, and Cournot competition have different implications for the consumer and the firm. Measuring the differences can be very informative, but first we...
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Don’t Discount the Importance of Patience
Uncertainty is one explanation for why interest rates vary. Tolerance for uncertainty is called risk aversion, and it can be pretty complicated. (We’ll talk about it a little bit later on.) Another big...
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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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The Do-Nothing Alternative
Consider the following situation: You are at a casino. You have a crisp new $100 bill in your pocket and an hour before your friend arrives. There are several options available: blackjack, poker, and...
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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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Diminishing Marginal Returns
Close your eyes. Well, finish reading the next paragraph first, and then close your eyes. I am going to offer you unlimited access to something good, something useful, something tasty. That’s right –...
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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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Faculty Freebies and Price Discrimination
Despite its nasty-sounding name, price discrimination is interesting and beneficial to some consumers. (Of course, when we move away from equilibrium to make someone better off , we usually make some...
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You were looking for what? (Or, search term questions.)
Occasionally I mine the search terms for interesting questions. Here are three from the past month: What is an increase in CPI? When a country’s CPI increases, that means that, on average, the cost of...
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