To renters, rent control is often seen as a very good thing. But cheap rents can actually cost a lot.Let’s take a look at the consequences of rent control in Mumbai, where many tenants are paying for their flats at 1940s rates. If a landlord r

Office Hours: Game Theory

Sep 27th, 2017 4m 13s

In game theory, the Nash equilibrium is a concept that can help you analyze the behavior and outcomes of two or more people in a non-cooperative situation. The Nash equilibrium means that no person has an incentive to change their behavior or s

Office Hours: Elasticity of Demand

Sep 12th, 2017 4m 22s

When the price goes up, what happens to the quantity demanded? It goes down. And vice-versa. This is known as the law of demand. Pretty straightforward.What this law doesn’t cover is how much the quantity demanded goes up or down as prices cha

Consumer Optimization

Jun 21st, 2017 6m 28s

We live in a world of scarcity. In other words, what we want outweighs what we can attain. Why? Well, we have limited resources – money, options, time, etc. When you’re making choices about what to buy, your budget, the prices of goods and serv

Indifference Curves

Jun 14th, 2017 8m 28s

Think about what restricts your choices when it comes to buying goods and services. Your income is one variable. Prices are another. What about what you like and don’t like? That’s an important one!Your preferences play a huge role in how you

Budget Constraints

Jun 7th, 2017 6m 45s

Think through all of the variables that determine the price of a cup of coffee. It might help to imagine the coffee beans on the farm first. Consider the land costs and the price of the farmer’s labor. What about transportation of the beans to

Introduction to Consumer Choice

May 27th, 2017 4m 41s

Everyday, you make tons of decisions about consumption. Your choices about what and how much of a good to buy are influenced by the laws of supply and demand. These choices are nearly endless. For example, at Starbucks, each drink is highly cus

Price Floors: The Minimum Wage

Apr 24th, 2017 9m 46s

Price floors, when prices are kept artificially high, lead to several consequences that hurt the consumer. In this video, we take a look at the minimum wage as an example of a price floor. Using the supply and demand curve and real world exampl

Arguments Against International Trade

Apr 24th, 2017 13m 55s

In this video, we discuss some of the most common arguments against international trade. Does trade harm workers by reducing the number of jobs in the U.S.? Is it wrong to trade with countries that use child labor? Is it important to keep a cer

The Marginal Product of Labor

Apr 24th, 2017 10m 22s

In this video on the marginal product of labor, we discuss some commons questions such as: How are wages determined? Why do most Americans earn so much by global standards? What exactly is meant by ‘human capital’? Do labor unions help workers,

Supply and Demand Terminology

Apr 24th, 2017 3m 56s

What is the difference between a change in demand and a change in the quantity demanded? The terminology can be confusing — but we’ll provide some clarity in this video. In short, a change in demand refers to a shift in the demand curve — cause

Applications Using Elasticity

Apr 24th, 2017 15m 49s

In this video, we take a look at real-world applications of elasticity, using the examples of slave redemption in Sudan and and the effects of gun buyback programs in the U.S.

The Great Economic Problem

Apr 24th, 2017 8m 13s

In this video, we discuss how different markets are linked to one another. How does the price of oil affect the price of candy bars? When the price of oil increases, it is of course more expensive to transport goods, like candy bars. But there

Price Controls and Communism

Apr 24th, 2017 3m 35s

What happens when the prices of all goods are controlled? Under communism, or a command economy, this is exactly what occurs. As a result, all of the effects of price controls become amplified: there are even more shortages or surpluses of good

Trading Pollution

Apr 24th, 2017 4m 9s

In an effort to reduce pollution, the government tried two policy prescriptions under the Clean Air Act Amendments of 1990. The first—command and control—mandated that each power plant lower its pollution by a determined amount. However, differ

Maximizing Profit Under Monopoly

Apr 24th, 2017 11m 11s

AIDS has killed more than 36 million people worldwide. There are drugs available to treat AIDS, but the price of one pill is incredibly high in the U.S. — coming in at 25 times higher than its cost. Why is that? In this video, we show how paten

Bundling

Apr 24th, 2017 15m 28s

Bundling refers to when two or more goods are sold together as a package. Microsoft Office, Cable TV, Lexis-Nexis, and Spotify all provide examples of bundling. What if there was no bundling and you had to pay for Cable TV by channel rather tha

Human Capital and Signaling

Apr 24th, 2017 7m 13s

Wages in America differ greatly among workers. Why is that? One reason includes differences in human capital — tools of the mind. Education is one of the biggest investments people make to increase their human capital. Which college majors offe

The Equilibrium Price and Quantity

Apr 24th, 2017 4m 50s

How are prices set in a market? The interactions of buyers (demand) and sellers (supply) determine the price of a good or service.The equilibrium price is the price where the quantity demanded is equal to the quantity supplied. That quantity is

Does the Equilibrium Model Work?

Apr 24th, 2017 8m

Does the equilibrium model work? Nobel Prize winner Vernon Smith conducted experiments testing this model and found that time and time again, the model did indeed work. This video takes a look at Smith’s evidence and analyzes other instances wh

I, Rose

Apr 24th, 2017 2m 30s

How is it that people in snowy, chilly cities have access to beautiful, fresh roses every February on Valentine’s Day? The answer lies in how the invisible hand helps coordinate economic activity, Using the example of the rose market, this vide

Price Ceilings: Deadweight Loss

Apr 24th, 2017 3m 33s

In this video, we explore the fourth unintended consequence of price ceilings: deadweight loss. When prices are controlled, the mutually profitable gains from free trade cannot be fully realized, creating deadweight loss. With price controls, l

The Big Ideas of Trade

Apr 24th, 2017 8m 2s

Trade makes people better off, but how? In this video we discuss the importance of specialization and division of knowledge. Specialization leads to improvements in knowledge, which then lead to improvements in productivity. For instance, physi

Elasticity of Supply

Apr 24th, 2017 14m 18s

When is a supply curve considered elastic? What are determinants of elasticity of supply? Let's compare Picasso paintings and toothpicks. Which has an elastic or inelastic supply? For which good could you increase production at a low cost? We a

Introduction to the Competitive Firm

Apr 24th, 2017 6m 52s

How does a company really behave? We tend to assume profit — the bottom line — is the main motivation for a firm’s actions. For most firms most of the time, this is a good assumption, especially in a competitive market. With this video, you wil