The Total Revenue Test of Price Elasticity of Demand

By looking at how a change in price affects the total revenues of producers in a market (whether TR increases or decreases) we can draw some quick and accurate conclusions about whether demand for a good is elastic, inelastic or unit elastic between two prices. We’ll also learn that even along a straight-line demand curve there is a RANGE of elasticities of demand for every good.

 

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Introduction to Dead Weight Loss (Welfare Loss)

Introduction to Dead Weight Loss (Welfare Loss)

As we’ve learned in earlier lessons, markets tend to achieve equilibrium prices and quantities that are efficient, as the marginal benefit of a product to its consumers equals the marginal cost to producers. But what makes outcomes other than equilibrium inefficient? This lesson looks at the impact of disequilibria on consumer and producer surplus, introducing the concept of “deadweight loss” or “welfare loss”, which will further help us understand what makes outcomes other than the equilibrium quantity and price inefficient.

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Introduction to the Central Themes of Economics

In our final lesson of the introductory unit in the Economics course we’ll explore some of the central themes that will guide our inquiry of the subject going forward. From the tradeoff between equity and efficiency to the distinction between growth and development to the role of government in the economy, several themes will form the basis of all inquiry in our study of Economics.

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Scarcity, the Basic Economic Problem

What would you do if you showed up to class and there weren’t nearly enough chairs to go around? Well, you’re facing and economic problem that requires an economic system to solve! This lesson introduces the basic economic problem of scarcity and defines “Economics” and “Economic systems”, both key concepts for a student starting out on his or her journey to study the “dismal science”!

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The Six Stages of Economic Integration (Holiday Special!)

In the first stage of integration my trading partners gave to me, access to certain products duty free! This special holiday lesson will introduce the different ways nation’s economies integrate with one another and remove trade barriers, from the lowest level of preferential trade agreements to complete economic integration! All with a little holiday cheer and some singing thrown in for good measure!

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Visualizing the Tragedy of the Commons

When a resource is abundant, it makes sense for it to be cheap. But as the scarcity of a resource (whether it’s renewable or non-renewable) is intensified under the pressure of growing demand and diminishing supply, a market failure arises if an efficient price is note established that assures the resources is consumed at a sustainable quantity. This lesson illustrates a simple supply and demand analysis of the Tragedy of the Commons.

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