Welcome to Principles of Economics! Here, you’ll learn the economic way of thinking. That is, you’ll understand how to use economics in your life and, ultimately, you’ll see the world differently.
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Introduction to Economics | Marginal Revolution University (MRU)
Economics is much more than just numbers and graphs. In fact, we can use economics to explain much of what we encounter …
1
Opportunity Cost and Tradeoffs
Opportunity cost and tradeoffs are two fundamental concepts from economics and they are all around us.
Tyler Cowen sha…
2
What Is Thinking on the Margin, and How Does It Solve the Sunk Cost Fallacy?
Thinking on the margin is one of the most fundamental concepts in economics–and a valuable everyday tool for making opti…
3
The Demand Curve
Why does the demand curve slope downward? The demand curve demonstrates how much of a good people are willing to buy at …
4
The Supply Curve
In this video, we explore the relationship between price and quantity supplied. Why does the supply curve slope upward? …
5
The Equilibrium Price and Quantity
In this lesson, we investigate how prices reach equilibrium and how the market works like an invisible hand coordinating…
6
Graphing a Demand Curve from a Demand Schedule, and How to Read a Demand Graph
The demand curve is the line in a supply and demand graph that shows consumer behavior: at a given market price, how man…
7
What Shifts the Demand Curve?
What are the factors that cause the demand curve to shift to the left or to the right? What does it mean when demand shi…
8
Change in Demand vs. Change in Quantity Demanded
What is the difference between a change in quantity demanded and a change in demand?
This video is perfect for economi…
9
What Is Consumer Surplus?
How to calculate consumer surplus using demand curves, and understand how it reflects the difference between willingness…
10
Graphing a Supply Curve from a Supply Schedule, and How to Read a Supply Graph
How do you graph a supply curve? Learn how to build and read supply curves on supply and demand graphs using real-world …
11
What Shifts the Supply Curve?
What shifts the supply curve? Anything that changes a supplier's cost. Learn how input costs, technology, taxes, trade, …
12
How to Calculate Producer Surplus from a Supply Curve
Producer surplus refers to a producer’s gain from exchange. That is, the difference between the market price and the min…
13
Equilibrium in Economics: How a Supply and Demand Graph Dot Explains Producer and Consumer Surplus
This video explores equilibrium–the point on a supply and demand graph where the supply curve and the demand curve inter…
14
Supply and Demand Terminology
What is the difference between a change in demand and a change in the quantity demanded? The terminology can be confusin…
15
Does the Equilibrium Model Work?
Does the equilibrium model work? Nobel Prize winner Vernon Smith conducted experiments testing this model and found that…
16
Elasticity of Demand
How much does quantity demanded change when price changes? By a lot or by a little? Elasticity can help us understand th…
17
Calculating the Elasticity of Demand
Elasticity of demand is equal to the percentage change of quantity demanded divided by percentage change in price. In th…
18
Office Hours: Elasticity of Demand
When should you want demand to be elastic vs. inelastic? Learn how to apply elasticity of demand to real-world scenarios…
19
Elasticity of Supply
When is a supply curve considered elastic? What are determinants of elasticity of supply? Let's compare Picasso painting…
20
Elasticity of Supply: Why Housing is Unaffordable
Why are houses and apartments so expensive in some big cities? To an economist, the real question is, “Why is housing su…
21
Elasticity of Supply: Do Gun Buybacks Work?
What happens when a new buyer enters a market with a perfectly elastic supply curve? A supply and demand graph tells the…
22
Tax Incidence Explained with Supply and Demand
In this video we cover taxes and tax revenue and subsidies on goods. We discuss commodity taxes, including who pays the …
23
Who Pays the Tax?
Who bears the burden of a tax? Buyers or sellers? Why is it that the more elastic side of the market pays a smaller shar…
24
Tax Revenue and Deadweight Loss
Why do taxes exist? What are the effects of taxes? We discuss how taxes affect consumer surplus and producer surplus and…
25
Subsidies
How subsidies affect supply and demand, who actually benefits based on elasticity (subsidy incidence), and how to analyz…
26
Wage Subsidies
What’s the difference between a wage subsidy and a minimum wage? What is the cost of a wage subsidy to taxpayers? We tak…
27
I, Rose
How is it that people in snowy, chilly cities have access to beautiful, fresh roses every February on Valentine’s Day? T…
28
A Price Is a Signal Wrapped Up in an Incentive
Join Professor Tabarrok in exploring the mystery and marvel of prices. We take a look at how oil prices signal the scarc…
29
Markets Link the World
In this video, we discuss how markets link people and places all over the world. We’ll take a look at production and con…
30
The Great Economic Problem
In this video, we discuss how different markets are linked to one another. How does the price of oil affect the price of…
31
Information and Incentives
What does an increase in the price of oil tell us? What does it signal? And how do we adjust to that signal? The price o…
32
Speculation
Speculation is often considered to be morally dubious. But, can speculation actually be useful to the market process? Th…
33
Prediction Markets
We’ve discussed how prices are signals that convey information about goods — but can prices also convey information abou…
34
Price Ceilings: The US Economy Flounders in the 1970s
In 1971, President Nixon, in an effort to control inflation, declared price increases illegal. Because prices couldn’t i…
35
How Price Ceilings Create Shortages and Lower Quality
Price ceilings result in five major unintended consequences, and in this video we cover two of them. Using the supply an…
36
Price Ceilings: Lines and Search Costs
In this video, we explore two more unintended consequences of price ceilings: long lines and search costs. What was it l…
37
Price Ceilings: Deadweight Loss
In this video, we explore the fourth unintended consequence of price ceilings: deadweight loss. When prices are controll…
38
Price Ceilings: Misallocation of Resources
Suppose there is a mild winter on the West Coast and a harsh winter on the East Coast. As a result of the weather, peopl…
39
Price Ceilings: Rent Controls
How rent controls (price ceilings) cause housing shortages, reduced quality, misallocation, and discrimination, using re…
40
Rent Control in Mumbai
For all you former, current, and future renters out there -- rent these days is too high, right? What if you could pay t…
41
Price Floors: The Minimum Wage
Price floors, when prices are kept artificially high, lead to several consequences that hurt the consumer. In this video…
42
Price Floors: Airline Fares
In this video, we cover how price floors lead to wasteful increases in quality and a misallocation of resources. Using t…
43
Why Do Governments Enact Price Controls?
If price controls have negative consequences, why do governments enact them? Let’s revisit our example of President Nixo…
44
Price Controls and Communism
What happens when the prices of all goods are controlled? Under communism, or a command economy, this is exactly what oc…
45
Trade: The Engine of Specialization, Productivity, and Growth
Trade makes people better off, but how? In this video we discuss the importance of specialization and division of knowle…
46
Comparative Advantage
What is comparative advantage? And why is it important to trade? This video guides us through a specific example surroun…
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Another Look at Comparative Advantage
How comparative advantage and opportunity cost explain trade between countries like the U.S. and Mexico, and why special…
48
Comparative Advantage Homework
Make sure you’ve completed the homework introduced in the Comparative Advantage video before you watch this video, as we…
49
Tariffs and Protectionism
Modeling international trade and tariffs using supply and demand graphs, showing the deadweight loss, consumer costs, an…
50
Arguments Against International Trade
In this video, we discuss some of the most common arguments against international trade. Does trade harm workers by redu…
51
An Introduction to Externalities
What are externalities and what are the different kinds of costs? And what does this have to do with the rise of “superb…
52
External Benefits
What can the flu teach us about economics and externalities? In this video, we go over how vaccines produce positive ext…
53
Command and Control Solutions
What happened to the cleanliness of your clothes after the U.S. Department of Energy issued new washing machine requirem…
54
The Coase Theorem
In this video, we show how bees and pollination demonstrate the Coase Theorem in action: when transaction costs are low …
55
Trading Pollution: How Pollution Permits Paradoxically Reduce Emissions
In an effort to reduce pollution, the government tried two policy prescriptions under the Clean Air Act Amendments of 19…
56
A Deeper Look at Tradeable Allowances
Since the passage of the Clean Air Act, SO2 emissions have decreased by 35%. Part of this is due to tradable allowances,…
57
Externalities and Incentives: The Economics of COVID
How can understanding externalities and incentives help us better respond to COVID-19?
The benefits of vaccines extend …
58
Introduction to the Competitive Firm
How does a company really behave? We tend to assume profit — the bottom line — is the main motivation for a firm’s actio…
59
Maximizing Profit Under Competition
A company in a competitive environment does not control prices. So the key to maximizing profit is choosing how much to …
60
Maximizing Profit and the Average Cost Curve
Being able to predict your company’s profit is a very useful tool. In this video, we introduce the third concept you nee…
61
Entry, Exit, and Supply Curves: Increasing Costs
We understand cost curves and entry and entry/exit decisions. Now we are going to explore how each firm’s decisions infl…
62
Entry, Exit, and Supply Curves: Constant Costs
Some industries have a flat supply curve. These are called constant cost industries. Take domain name registration: to i…
63
Entry, Exit, and Supply Curves: Decreasing Costs
In this video, we talk about the special case of the decreasing cost industry. As output increases, costs will continue …
64
Minimization of Total Industry Costs of Production
This section connects several ideas covered in previous videos about the price system and profit maximization. In this v…
65
The Balance of Industries and Creative Destruction
Why are price signals and market competition so important to a market economy? When prices accurately signal costs and b…
66
Maximizing Profit Under Monopoly
AIDS has killed more than 36 million people worldwide. There are drugs available to treat AIDS, but the price of one pil…
67
Office Hours: Calculating Monopoly Profit
In our video on Maximizing Profit Under Monopoly, we cover how firms can use their market power to raise the price of a …
68
The Monopoly Markup
Ever wonder why pharmaceuticals are so expensive? In this video, we show how low elasticity of demand results in monopol…
69
The Costs and Benefits of Monopoly
In this video, we explore the costs and benefits of monopolies. We cover how monopolies and patents breed deadweight los…
70
Introduction to Price Discrimination
Price discrimination is common: movie theaters charge seniors less money than they charge young adults. Computer softwar…
71
The Social Welfare of Price Discrimination
Now that we’ve learned a little about price discrimination, we can begin to think about whether or not price discriminat…
72
Tying
What is tying and how is this a form of price discrimination? An example of a tied good is an HP printer and the HP ink …
73
Bundling
Bundling refers to when two or more goods are sold together as a package. Microsoft Office, Cable TV, Lexis-Nexis, and S…
74
The Marginal Product of Labor
In this video on the marginal product of labor, we discuss some commons questions such as: How are wages determined? Why…
75
Econ Duel: Is Education Signaling or Skill Building?
What’s the point of education?
Do you learn about things, because the learning itself matters, or is education all abou…
76
Human Capital and Signaling
Wages in America differ greatly among workers. Why is that? One reason includes differences in human capital — tools of …
77
The Tradeoff Between Fun and Wages: No Such Thing as a Free Lunch
If you had to choose, would you rather be a sewer inspector spending your days underground or a lifeguard on the beach? …
78
Compensating Differentials
Firms have an incentive to increase job safety, because then they can lower wages. In this video, we explore this surpri…
79
Do Unions Raise Wages?
Do unions raise wages for workers as a whole? If not, can unions raise the wages of some workers? The answer is, well, i…
80
Public Goods and Asteroid Defense
While the probability of an asteroid hitting the planet is very low, its effect would be disastrous for all of us. So, w…
81
A Deeper Look at Public Goods
Description: What do we mean by “nonexcludable” and “nonrival” when talking about public goods? Public goods challenge m…
82
Club Goods
In this video we discuss club goods. Club goods are nonrival and excludable. For instance, HBO is a club good, as you ne…
83
The Tragedy of the Commons
How common resources, like fisheries and forests, suffer from the tragedy of the commons, and economic solutions includ…
84
Asymmetric Information and Used Cars
George Akerlof, a Nobel Prize-winning economist, analyzed the theory of adverse selection – which occurs when an offer c…
85
Asymmetric Information and Health Insurance
In this video, we discuss asymmetric information, adverse selection, and propitious selection in relation to the market …
86
Moral Hazard
Imagine you take your car in to the shop for routine service and the mechanic says you need a number of repairs. Do you …
87
Solutions to Moral Hazard
What are some solutions to moral hazard? We could try to make information less asymmetric — meaning both parties have si…
88
Signaling
A signal is an action that reveals information. Let’s look at higher education, for example. A large fraction of the val…
89
Introduction to Consumer Choice
Everyday, you make tons of decisions about consumption. Your choices about what and how much of a good to buy are influe…
90
Budget Constraints
Think through all of the variables that determine the price of a cup of coffee. It might help to imagine the coffee bean…
91
Indifference Curves
Think about what restricts your choices when it comes to buying goods and services. Your income is one variable. Prices …
92
Consumer Optimization
We live in a world of scarcity. In other words, what we want outweighs what we can attain. Why? Well, we have limited re…
93
Office Hours: Game Theory
This video uses game theory to solve a simple problem. Bob and Al are magicians. They’ve agreed to only perform one show…
