Microeconomics: The Power of Markets
University of Pennsylvania
À propos de ce cours
We make economics decisions every day: what to buy, whether to work or play, what to study. We respond to markets all the time: prices influence our decisions, markets signal where to put effort, they direct firms to produce certain goods over others. Economics is all around us.
This course is an introduction to the microeconomic theory of markets: why we have them, how they work, what they accomplish. We will start with the concept of scarcity and how specialization according to comparative advantage helps us achieve more than we could alone. Next we model a marked using the tools of Supply and Demand and learn what well working markets accomplish and what their limit are. We end by exploring the impact of government intervention on perfect markets. Examples are taken from everyday life, from goods and services that we all purchase and use. We will apply the theory to current events and policy debates through weekly exercises. These will empower you to be an educated, critical thinker who can understand, analyze and evaluate market outcomes.
Compétences que vous acquerrez
EconomicsEconomic AnalysisCostDecision-Making
Syllabus - What you will learn from this course
1
Section
The Concept of Scarcity
Where do markets come from? We will start with understanding the constraint of scarcity that we face and the concept of opportunity cost that reflects the true cost of any decision we make. We will learn to model scarcity using the Production Possibilities Frontier that allows us to visualize tradeoffs, distinguish between efficient, inefficient and unattainable points. We will also discuss how economic growth affects our options and allows us to achieve the previously unattainable.
17 videos (Total 54 min), 3 readings, 3 quizzes
17 videos
1.1.1 Opportunity Cost: Introduction2m
1.1.2 Opportunity Cost: The Cost of Education2m
1.1.3 Opportunity Cost: Numeric Example 13m
1.1.4 Opportunity Cost: Numeric Example 22m
1.1.5 Opportunity Cost: Numeric Example33m
1.1.6 Opportunity Cost: Numeric Example 42m
1.2.1 Scarcity: Introduction2m
1.2.2 Production Possibilities Frontier: Definition2m
1.2.3 Allocative Efficiency: Defining Marginal Cost and Marginal Benefit3m
1.2.4 Allocative Efficiency: When Marginal Cost Equals Marginal Benefit1m
1.2.5 Production Possibilities Frontier: Graphical Approach4m
1.2.6 Production Possibilities Frontier: Numerical Example4m
1.2.7 Production Possibilities Frontier: Understanding the Slope2m
1.2.8 Production Possibilities Frontier: Modeling Technological Change and Growth2m
1.2.9 Allocative Efficiency: Graphical Approach 13m
1.2.10 Allocative Efficiency: Graphical Approach 27m
3 readings
Additional Readings: General Suggestions10m
Participate in a Purdue Research Project (Optional)10m
Additional Readings: Week 110m
3 practice exercises
Opportunity Cost6m
Production Possibility Frontier (PPF)6m
Production Possibilities Frontier and Growth8m
2
Section
Specialization & Trade
Trade allows us to achieve the unattainable- we can consume more than we can produce on our own. We will introduce the concept of Comparative Advantage and discuss how gains from specialization allow us to use our resources efficiently. We will apply these concepts to a simple model of trade, showing that now the Consumption Possibilities Frontier allows points outside the Production Possibilities Frontier.
14 videos (Total 39 min), 1 reading, 2 quizzes
14 videos
2.2.1 Comparative Advantage: Numerical Example 1 - Set up1m
2.2.2 Comparative Advantage: Numerical Example 2 - Individual PPFs3m
2.2.3 Comparative Advantage: Numerical Example 3 - Joint PPF2m
2.2.4 Comparative Advantage: Numerical Example 4 - Joint PPF Completed3m
2.3.2 Comparative Advantage: Definition0m
2.2.5 Comparative Advantage: Numerical Example 5 - Gains from Specialization4m
2.2.6 Comparative Advantage: Numerical Example 61m
2.2.7 Comparative Advantage: Numerical Example 72m
2.3.1 Absolute Advantage: Definition0m
2.4.1 Gaining from Specialization Through Trade3m
2.4.2 Gaining from Specialization: The Consumption Possibilities Frontier4m
2.4.3 Gaining from Specialization: General Graphical Approach5m
2.4.4 Gaining from Specialization: Imports and Exports3m
1 readings
Additional Readings: Week 210m
2 practice exercises
Comparative Advantage10m
Trade4m
3
Section
Supply and Demand
We will introduce the central model of Supply & Demand. This will allow you to communicate with other economists and finally understand those business pages and market updates. We will distinguish between a movement along and a movement of the supply & demand curves. We will define market equilibrium as understand that at an equilibrium price there is neither excess demand nor excess supply. We will end by a few scenarios where exogenous changes affect supply and/or demand and analyze the impact on equilibrium price and quantity.
15 videos (Total 44 min), 1 reading, 4 quizzes
15 videos
3.1.2 The Demand Curve3m
3.1.3 Shifts of Demand: Part 13m
3.1.4 Shifts of Demand: Part 24m
3.1.5 The Supply Curve4m
3.1.6 Shifts of Supply: Part 12m
3.1.7 Shifts of Supply: Part 23m
3.1.8 Market Equilibrium: Definition2m
3.1.9 Market Equilibrium: Understanding Who Buys and Who Sells2m
3.1.10 The Invisible Hand: Part 13m
3.1.11 The Invisible Hand: Part 22m
3.1.12 Changes in Demand: Effect on Market Equilibrium3m
3.1.13 Changes in Supply: Effect on Market Equilibrium2m
3.1.14 Simultaneous Changes in Demand & Supply: Effect on Market Equilibrium2m
3.1.15 Supply & Demand: Conclusion1m
1 readings
Additional Readings: Week 310m
4 practice exercises
The Demand Curve8m
The Supply Curve4m
Market Equilibrium8m
A Change in Market Equilibrium6m
4
Section
Understanding Markets: Elasticities, Market Surplus, Efficiency, and Equity
There is a lot of terminology this week. We will introduce of the concept of elasticity of demand that measures the responsiveness of quantity demanded to a change in the price of a good. We will explore the relationship between change in price and revenue or sales and how elasticities can help us predict whether a decrease in price will increase or decrease revenue. We then introduce other elasticities of note: cross price elasticity, income elasticity and elasticity of supply. We end the week by exploring the great accomplishment of markets: maximizing the size of the pie or the total benefit to society.
23 videos (Total 82 min), 1 reading, 4 quizzes
23 videos
4.1.2 Elasticity of Demand4m
4.1.3 What Affects Elasticity of Demand4m
4.1.4 Perfectly Inelastic and Perfectly Elastic Demand4m
4.1.5 Elasticity Along a Straight Line Demand Curve3m
4.1.6 Elasticity and Revenue: Part 13m
4.1.7 Elasticity and Revenue: Part 21m
4.1.8 Unit Elastic Demand Curve2m
4.1.9 Cross Price Elasticity: Complements vs. Substitutes2m
4.1.10 Income Elasticity: Normal vs. Inferior Goods2m
4.1.11 Elasticity of Supply3m
4.1.12 Elasticity: Summary1m
4.2.1 Efficiency & Equity: Introduction2m
4.2.2 Consumer Surplus5m
4.2.3 Producer Surplus4m
4.2.4 Maximizing Total Surplus1m
4.2.5 T.S. at a Quantity Greater Than Equilibrium Quantity4m
4.2.6 T.S. at a Quantity Smaller Than Equilibrium Quantity4m
4.2.7 Efficiency & Equity: Conclusion1m
4.2.8 Price Ceiling5m
4.2.9 Price Floors: The Case of Minimum Wage5m
4.2.10 Calculating Total Surplus: Numerical Example4m
4.2.11 Price Ceilings: A Numerical Example5m
1 readings
Additional Readings: Week 410m
4 practice exercises
Elasticity of Demand10m
Elasticity of Demand & Revenue4m
Other Elasticity Terms6m
Consumer and Producer Surplus8m
5
Section
When Government Intervenes
In week four we learnt that the markets maximize the surplus that can be generated. So what happens if the government steps in and intervenes in the market? This week we will analyze price floors and ceilings, taxes and subsidies and learn how the best intentions sometimes lead to very unfortunate results.
16 videos (Total 51 min), 1 reading, 5 quizzes
16 videos
5.1.2 Modeling a Tax2m
5.1.3 Modeling a Tax: Graphically Interpretation2m
5.1.4 Consequence of a Tax on Consumer and Producer Surplus4m
5.1.5 Consequence of a Tax on Total Surplus2m
5.1.6 Dead Weight Loss1m
5.1.7 Tax Incidence2m
5.1.8 Tax in Extreme Cases of Demand Elasticity6m
5.1.9 Tax in Extreme Cases of Elasticity of Supply4m
5.1.10 Taxes: Summary2m
5.1.11 Modeling a Subsidy2m
5.1.12 Consequence of a Subsidy on Total Surplus5m
5.1.13 Subsidy: Summary2m
5.1.14 Taxes: Numerical Example Part 13m
5.1.15 Taxes: Numerical Example Part 23m
The Power of Markets: Conclusion2m
1 readings
Additional Readings: Week 510m
5 practice exercises
Price Intervention12m
Taxes10m
Subsidies8m
Government Intervention6m
Final Exam40m
4.7
50%
83%
20%
Top Reviews
By AS•Jan 14th 2017
I really enjoyed the clarity with which the concepts were taught. I loved the examples and I thought they were very helpful and made the concepts so much easier to understand.
By LY•Apr 11th 2016
Thanks for the professional details of this course. And I think the numerical examples provided by Professor Rebecca give me good understanding about the power of markets.
Instructor
Rebecca Stein
Senior LecturerAbout University of Pennsylvania
The University of Pennsylvania (commonly referred to as Penn) is a private university, located in Philadelphia, Pennsylvania, United States. A member of the Ivy League, Penn is the fourth-oldest institution of higher education in the United States, and considers itself to be the first university in the United States with both undergraduate and graduate studies.
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