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Tutorials
Each of the tutorials listed below contains my distillation
of the important concepts and graphical models relevant
to each section of the course.
A buyer's reservation price is the maximum price he or
she is willing to pay for a quantity of a good. A seller's
reservation price is the minimum price he or she is willing
to accept in payment for a quantity of a good. This tutorial
looks at how buyers and sellers, focusing only on their
personal reservation prices, can, in the context of a
market, produce an outcome that brings the most benefit
to society.
This tutorial reviews how supply and demand interact
to determine the market price and quantity of a good or
service. It also reviews how changes in factors underlying
demand and supply lead to changes in market prices and
quantities. The impact of government-set price controls
on a market is also examined.
This tutorial extends the discussion of supply and demand,
exploring issues pertaining to a buyer's or seller's responsiveness
to a change in price or income. Elasticity is the name
given to a measure of this responsiveness.
This tutorial has three parts. The first part explores
the nature of consumer preferences as modeled by indifference
curves. The second part explores the constraint imposed
on consumers by their income and the prices of the goods
they buy. This constraint is modeled by a budget line.
The third part explores how a commodity bundle is chosen
by a consumer who seeks to maximize the satisfaction received
from the bundle of goods given a budget constraint.
In this tutorial you will vary the price of Food (keeping
income and the price of clothing constant) and find how
the consumer choice model can be used to uncover the consumer's
demand curve for food. Then you will vary income (keeping
prices constant) to see how that demand curve shifts.
Starting with a single consumer's demand curve, we will
see how the market demand is derived.
In this tutorial we look at how a firm combines factor
inputs to produce goods or services. In the first part,
only one input is allowed to vary to increase production.
In the second and third parts, more than one input is
varied.
In this tutorial we combine information on a firm's production
function with the prices of factor inputs to determine
the firm's costs of production. With that information
we can explore how a firm decides how to produce -- how
many units of each input to employ. We define the optimal
combination of factor inputs as the combination that produces
a given level of output at a minimum cost.
Now we turn to another fundamental problem faced by a
firm; What quantity should be produced? In this tutorial
we explore how a firm with no market power chooses the
level of output that maximizes profit. We also explore
how the output choices of an individual firm lead to a
supply curve for the entire perfectly competitive market.
In this Tutorial you also explore how changes in market
demand and supply affect the firm in both the short run
and the long run, under different assumptions about the
cost structure of the industry.
In the previous tutorial, the profit-maximizing firm
took the market price as given in deciding how much to
produce and offer for sale. In markets with one or even
many (as opposed to thousands) of firms, each firm has
more control over the price. As a result of this "price-setting
power", the profit-maximizing price and output will
differ from what would prevail in a perfectly competitive
market.
This tutorial explores the model of a wage-taking firm
in a perfectly competitive labor market. We explore how
changes in product demand, worker productivity, and the
number of product sellers, affects the wage rate set by
the market, and the profit-maximizing number of workers
hired by the firm and in the market.
In labor markets with only one firm hiring labor, that
firm has some control over the wage rate paid workers.
As a result of this "wage-setting power", the
profit-maximizing wage and number of workers hired will
differ from what would prevail in a perfectly competitive
labor market.
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