Microeconomics: The Power of Markets

About this course: 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.

Created by:  University of Pennsylvania

• Taught by:  Rebecca Stein, Senior Lecturer

  Economics

Commitment 5 weeks of study, 4-7 hours/week Language English, Subtitles: Mongolian How To Pass Pass all graded assignments to complete the course. 课程作业

每门课程都像是一本互动的教科书，具有预先录制的视频、测验和项目。

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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.

Syllabus


WEEK 1


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, 2 readings expand

1. Video: The Power of Markets: Introduction
2. 阅读: Additional Readings: General Suggestions
3. Video: 1.1.1 Opportunity Cost: Introduction
4. Video: 1.1.2 Opportunity Cost: The Cost of Education
5. Video: 1.1.3 Opportunity Cost: Numeric Example 1
6. Video: 1.1.4 Opportunity Cost: Numeric Example 2
7. Video: 1.1.5 Opportunity Cost: Numeric Example3
8. Video: 1.1.6 Opportunity Cost: Numeric Example 4
9. Video: 1.2.1 Scarcity: Introduction
10. Video: 1.2.2 Production Possibilities Frontier: Definition
11. Video: 1.2.3 Allocative Efficiency: Defining Marginal Cost and Marginal Benefit
12. Video: 1.2.4 Allocative Efficiency: When Marginal Cost Equals Marginal Benefit
13. Video: 1.2.5 Production Possibilities Frontier: Graphical Approach
14. Video: 1.2.6 Production Possibilities Frontier: Numerical Example
15. Video: 1.2.7 Production Possibilities Frontier: Understanding the Slope
16. Video: 1.2.8 Production Possibilities Frontier: Modeling Technological Change and Growth
17. Video: 1.2.9 Allocative Efficiency: Graphical Approach 1
18. Video: 1.2.10 Allocative Efficiency: Graphical Approach 2
19. 讨论提示: Production Possibilities Frontier in Your Local Area
20. 阅读: Additional Readings: Week 1

Graded: Opportunity Cost
Graded: Production Possibility Frontier (PPF)
Graded: Production Possibilities Frontier and Growth

WEEK 2


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, 1 reading expand

1. Video: 2.1.1 Markets and Trade: Introduction
2. Video: 2.2.1 Comparative Advantage: Numerical Example 1 - Set up
3. Video: 2.2.2 Comparative Advantage: Numerical Example 2 - Individual PPFs
4. Video: 2.2.3 Comparative Advantage: Numerical Example 3 - Joint PPF
5. Video: 2.2.4 Comparative Advantage: Numerical Example 4 - Joint PPF Completed
6. Video: 2.3.2 Comparative Advantage: Definition
7. Video: 2.2.5 Comparative Advantage: Numerical Example 5 - Gains from Specialization
8. Video: 2.2.6 Comparative Advantage: Numerical Example 6
9. Video: 2.2.7 Comparative Advantage: Numerical Example 7
10. Video: 2.3.1 Absolute Advantage: Definition
11. Video: 2.4.1 Gaining from Specialization Through Trade
12. Video: 2.4.2 Gaining from Specialization: The Consumption Possibilities Frontier
13. Video: 2.4.3 Gaining from Specialization: General Graphical Approach
14. Video: 2.4.4 Gaining from Specialization: Imports and Exports
15. 讨论提示: Comparative Advantage of Your Local Area
16. 阅读: Additional Readings: Week 2

Graded: Comparative Advantage
Graded: Trade

WEEK 3


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, 1 reading expand

1. Video: 3.1.1 Supply & Demand: Introduction
2. Video: 3.1.2 The Demand Curve
3. Video: 3.1.3 Shifts of Demand: Part 1
4. Video: 3.1.4 Shifts of Demand: Part 2
5. Video: 3.1.5 The Supply Curve
6. Video: 3.1.6 Shifts of Supply: Part 1
7. Video: 3.1.7 Shifts of Supply: Part 2
8. Video: 3.1.8 Market Equilibrium: Definition
9. Video: 3.1.9 Market Equilibrium: Understanding Who Buys and Who Sells
10. Video: 3.1.10 The Invisible Hand: Part 1
11. Video: 3.1.11 The Invisible Hand: Part 2
12. Video: 3.1.12 Changes in Demand: Effect on Market Equilibrium
13. Video: 3.1.13 Changes in Supply: Effect on Market Equilibrium
14. Video: 3.1.14 Simultaneous Changes in Demand & Supply: Effect on Market Equilibrium
15. Video: 3.1.15 Supply & Demand: Conclusion
16. 讨论提示: Model the Supply & Demand of a Good or Service
17. 阅读: Additional Readings: Week 3

Graded: The Demand Curve
Graded: The Supply Curve
Graded: Market Equilibrium
Graded: A Change in Market Equilibrium

WEEK 4


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, 1 reading expand

1. Video: 4.1.1 Elasticity: Introduction
2. Video: 4.1.2 Elasticity of Demand
3. Video: 4.1.3 What Affects Elasticity of Demand
4. Video: 4.1.4 Perfectly Inelastic and Perfectly Elastic Demand
5. Video: 4.1.5 Elasticity Along a Straight Line Demand Curve
6. Video: 4.1.6 Elasticity and Revenue: Part 1
7. Video: 4.1.7 Elasticity and Revenue: Part 2
8. Video: 4.1.8 Unit Elastic Demand Curve
9. Video: 4.1.9 Cross Price Elasticity: Complements vs. Substitutes
10. Video: 4.1.10 Income Elasticity: Normal vs. Inferior Goods
11. Video: 4.1.11 Elasticity of Supply
12. Video: 4.1.12 Elasticity: Summary
13. Video: 4.2.1 Efficiency & Equity: Introduction
14. Video: 4.2.2 Consumer Surplus
15. Video: 4.2.3 Producer Surplus
16. Video: 4.2.4 Maximizing Total Surplus
17. 阅读: Additional Readings: Week 4
18. Video: 4.2.5 T.S. at a Quantity Greater Than Equilibrium Quantity
19. Video: 4.2.6 T.S. at a Quantity Smaller Than Equilibrium Quantity
20. Video: 4.2.7 Efficiency & Equity: Conclusion
21. Video: 4.2.8 Price Ceiling
22. Video: 4.2.9 Price Floors: The Case of Minimum Wage
23. Video: 4.2.10 Calculating Total Surplus: Numerical Example
24. Video: 4.2.11 Price Ceilings: A Numerical Example
25. 讨论提示: Order Goods by Decreasing Elasticity

Graded: Elasticity of Demand
Graded: Elasticity of Demand & Revenue
Graded: Other Elasticity Terms
Graded: Consumer and Producer Surplus

WEEK 5


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, 1 reading expand

1. Video: 5.1.1 Government Intervention: Introduction
2. Video: 5.1.2 Modeling a Tax
3. Video: 5.1.3 Modeling a Tax: Graphically Interpretation
4. Video: 5.1.4 Consequence of a Tax on Consumer and Producer Surplus
5. Video: 5.1.5 Consequence of a Tax on Total Surplus
6. Video: 5.1.6 Dead Weight Loss
7. Video: 5.1.7 Tax Incidence
8. Video: 5.1.8 Tax in Extreme Cases of Demand Elasticity
9. Video: 5.1.9 Tax in Extreme Cases of Elasticity of Supply
10. Video: 5.1.10 Taxes: Summary
11. Video: 5.1.11 Modeling a Subsidy
12. Video: 5.1.12 Consequence of a Subsidy on Total Surplus
13. Video: 5.1.13 Subsidy: Summary
14. Video: 5.1.14 Taxes: Numerical Example Part 1
15. Video: 5.1.15 Taxes: Numerical Example Part 2
16. Video: The Power of Markets: Conclusion
17. 讨论提示: Analyze a Price Regulation or Intervention
18. 阅读: Additional Readings: Week 5

Graded: Price Intervention
Graded: Taxes
Graded: Subsidies
Graded: Government Intervention
Graded: Final Exam