Econ. 4010 Videos
The designation of each broad topic below (A, B, C, ..., L, M, E) is
the same as its designation in the "Old Exam Questions and Their
Answers" web page.
A. Mathematics. Here you learn the relationship between the graph of a function, the graph of
its slope (its "marginal"), and the graph of its average. This material is tested on Exam 1
because it is crucial that you understand it before lectures on Topic F begin.
i) Slopes.
ii) Graphs of Slopes.
iii) Averages.
iv) Averages and Marginals. Note that at 2:15 in this video, I say the top graph starts at 50,
although it actually starts at 40. Later on in the video I correct that mistake. Also, the
methods we have to find the marginal are only approximations. (An exact method would
require us to know the precise functional form of the relationship, which we do not know.)
I first use 2-hour-long intervals to approximate the marginal; later, I use tangent lines.
These approximations do not agree closely with each other in this example. In
this PDF file, I show both approximations of the marginal, and specify more about where
each comes from. In this class, we will mostly use the tangent-line approximation, which
would be exact if we could draw a precise tangent line (which we can't). Furthermore,
most of the graphs in the rest of this course will not have any numbers on their axes,
so the tangent-line approximation will be the only one that can be used. Economists have
to be able to deal with general shapes that have no numbers, because we often have little
idea of what the right numbers are (since we usually can't run controlled experiments to
measure
things).
vi) Social
Security Tax example. I labeled the slope "0.765" but it's
supposed to be "0.0765."
vii) Medicare Premium example. (The numbers are for the year 2014.)
viii) Examples inspired by the Theory of the Firm. There is no video for this topic; instead,
study the first two pages of the "Class Handouts" to understand how the lines for
averages and marginals (the bottom graphs) were derived from the totals (the top
graphs).
ix) Inverse Marginal, that is, partially determining the graph of a function from the graph of
its marginal.
x) Inverse Average, that is, completely determining the graph of a function from the graph of
its marginal and its average. After watching this video, practice with the first two pages of
the "Class Handouts," trying go from their "average" and "marginal" graphs to their
"total"
graphs.
xi) Contour Lines.
xii) Contour Lines, Part 2.
xiii) Convex
and Concave functions.
B. The Theory of Choice. This is the basic theory of how a consumer decides which
commodity bundle to buy, given prices, income, and the consumer's preferences
over commodities.
i) Utility
functions.
ii) Cognitive
Limitations.
iii) Indifference
Curves' slope. At 5:00 in this video, I refer to
"superscripts," but they are
actually subscripts. At 5:21, I use the term "indifference curve" without telling you what
an
"indifference curve" is: an "indifference curve" is "a contour line of
the utility function."
iv) Indifference
Curves for Non-monotonic Preferences.
v) Indifference
Curves' curvature.
vi) Marginal
Rate of Substitution.
vii) The
Budget Constraint.
viii) Simple
Consumer Choices.
ix) Nonstandard Consumer Choices: Example 1.
x) Nonstandard
Consumer Choices: Example 2.
xi) Lump
Sum Taxes, Part 1.
xii) Lump Sum Taxes, Part 2.
xiii) Lump Sum Taxes, Part 3.
xiv) Lump
Sum Taxes, Part 4.
xv) Rationing.
C. Changes in Income and Prices. This shows how the decisions described in
Topic B change when a consumer's income changes or when the prices which
the consumer has to pay change. One result is how to draw demand curves.
i) The
Income Expansion Path
ii) Normal
and Inferior Goods
iii) Luxuries
and Necessities
iv) Price
Changes
v) Complements
and Substitutes
vi) The
Income Effect and the Substitution Effect
vii) Complicated
Example: Complements and Substitutes
viii) Complicated
Example, Continued: Normal, Inferior, and Giffen Goods
ix) More on Giffen Goods. The final example, concerning laboratory rats, is explained in a three-
page-long PDF
file here.
(Ignore the fact that its pages have blank spaces in odd places.)
x) Final
Example for Changes in Income and Prices
D. Market Demand and Elasticity. Adding the demand curve of different individuals to
obtain the market demand curve; and different ways of describing how sensitive
demand curves are to changes in income and in prices.
i) Adding
Demand Curves
ii) Elasticity
of Demand
iii) Elasticity
of Linear Demand
iv) Income
Elasticity
v) Cross
Price Elasticity
vi) Elasticity
Example
F. The Technology of Production. The basis for the theory of the firm, this
describes in an abstract way the technical, "engineering" options which
are available to the firm.
i) The Production Function and its Shortcomings
ii) Isoquants
iii) Rate of Technical Substitution
iv) Returns to Scale
v) Returns to Scale: Further Examples
vii) Marginal Product
viii) Average Product
ix) Relation
between Average and Marginal
x) Average
Product versus Average Productivity
xi) Marginal
Product and Rate of Technical Substitution
xii) Conceptual
Difficulties with Capital and Capital Aggregation
xiii) Capital
Aggregation, Part 2
xiv) Capital
Aggregation, Part 3. Completely optional reading which will
not be
on any of our exams: Cambridge
Capital Controversy.
G. Cost Functions. For a given level of output, firms minimize costs; this
sections describes the results. Determination of the optimal level of output
is postponed until Topic H. There are many graphs here.
i) Cost Minimization, Part 1. Note that the lines representing constant total cost
(for example, the lines marked TC_1, TC_2, TC_3, etc. near the end of this video)
are also called "isocost lines" because all points on each such line represent
equal total cost for the firm.
iii) Expansion Paths
iv) Short-Run Cost Function: Introduction
v) Short-Run
Total Costs: Type 1
vi) Short-Run Average and Marginal Costs: Type 1
vii) Short-Run Type 1 Summary. The handout is page 5 of "Class Handouts."
viii) Short-Run Total Costs: Type 2. The handout for this video and the next one is
page 6 of "Class Handouts."
ix) Short-Run Average and Marginal Costs: Type 2
x) Short Run to Long Run, Part 1
xi) Short Run to Long Run, Part 2. This concerns page 7 of the "Class Handouts,"
"How Short-Run
Total Cost Curves could cross."
xii) Short Run to Long Run: No Crossing is Possible. See page 8 of the "Class Handouts."
xiii) Short
Run to Long Run, Conclusion
xiv) Long Run Total Cost
xv) Long Run A1 and B1. See the top of page 9 of the "Class Handouts."
xvi) Long Run C1 and D1. See the bottom of page 9 of the "Class Handouts."
xvii) Long Run A2, B2, C2, and D2. See page 10 of the "Class Handouts."
xviii) Equality
of Marginal Products
An overview of Cost Curves is on page 4 of the "Class Handouts." You can ignore the
"Very Long Run" part of that page. Also, if you're having trouble understanding any
of the shapes covered in Topic G, recall that almost all of the shapes are treated on pages
1 and 2 of the "Class Handouts."
H. Profit. Given the results of Topic G, we can now determine what the firm can do
to maximize its profit. This results in supply curves, among other results.
ii) Characterization of Profit Maximization
iii) Perfect Competition
iv) Shutdown Rule
vi) Short-Run Supply Curve (Type 2)
vii) Short-Run Supply Curve Detail (Type 2)
viii) Short-Run Simple Profit Graph (Type 2)
ix) Short-Run Further Profit Graphs (Type 2). See the left-hand side of p. 12 of the "Class Handouts."
x) Short-Run Profit Graph (Type 1). See the right-hand side of p. 12 of the "Class Handouts."
xi) Long-Run Competitive Pricing (Types A and B). See the left-hand side of p. 11 of the "Class Handouts."
xii) Long-Run Competitive Pricing (Types C and D). See the right-hand side of p. 11 of the "Class Handouts."
xiii) Discontinuous Supply
xiv) Imperfect Competition: Demand and Revenue
xv) Imperfect Competition: Marginal Revenue and Elasticity
xvi) Imperfect Competition: Linear Demand
xvii) History of Economic Thought: Comment
xviii) Optional video (not on Exam 2): Critique of the "Very Long Run"
xix) Equality
of Marginal Costs; Equality of Marginal Revenues
I. Competitive Equilibrium. What happens when supply curves equal demand curves. Also,
why we have no theory as to whether competitive supply will come to equal competitive
demand.
ii) Overview of Competitive Equilibrium
iii) No "Approach to Equilibrium"
iv) Unusual
Market Supply Curves
J. Tax Incidence. When a tax is imposed on firms, do they pass it all on to
consumers? In a certain circumstance; this explains the details.
i) Tax Incidence. At 14:02 in this video I correct a mistaken line I drew about 15 seconds earlier.
K. Monopoly and Consumer & Producer Surplus. How a monopolist behaves and
why it is bad (at least in our simple framework).
iii) Monopoly versus Competition, Part 1
iv) Consumer Surplus
vi) Social Surplus
vii) Monopoly versus Competition, Part 2
viii) Newer video: Consumer Surplus does not reflect Justice
ix) Newer video: Consumer Surplus is an Incorrect Measure of Value
x) Newer video: Willingness (and Ability) to Pay and Willingness to Accept can lead to Inconsistent Social Decisions
L. Input Markets. Above we studied the production and consumption of final goods,
also called "consumer goods." How about goods purchased by firms, such as
labor?
i) Expanding the realms of Supply & Demand
ii) Rent
iii) Demand for Inputs
iv) Supply of Inputs
v) Monopsony
M. Dynamic Economics. How do economic agents value revenues and costs
which accrue in the future?
E. The Edgeworth Box. This "Box" is a simple mechanism to allow studying
the general equilibrium of an economy (equilibrium in all markets simultaneously).
It also reveals social welfare properties of such equilibria.
ii) Contract Curve & Pareto Optimality
iii) Efficiency without Communication, Part 1
iv) Efficiency without Communication, Part 2: The First Theorem of Welfare Economics