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2. Analyzing tradeoffs.
Further Study
These optional resources are provided for students that wish to explore
3. All of these. this topic more fully.
4. Studying how individuals and firms make themselves
Study Materials
See the course website for Econ 302, Intermediate Microeconomics
as well off as possible given conditions of scarcity.
taught at Penn State in 2011.
Supply nd demand Additional Resources
You may not realize it, but every time you purchase something, you CONTENT PROVIDER NOTES
are participating in a market for that good. Some people supply it,
Demand Curve – Moving Along the College- Interactive
and some people—you!—demand it. In this lecture, we will examine
Curve Cram.com tutorial
how to analyze supply and demand curves and the impact changes in
market conditions and government policy can have on market College- Interactive
Demand Curve – Shifting the Curve
equilibrium. Cram.com tutorial
Government intervention can impact gasoline prices. Image courtesy Supply Curve – Moving Along the College- Interactive
of Aaron Tyo-Dikerson on Flickr. Curve Cram.com tutorial
Keywords: Supply and demand; equilibrium; demand shift; supply College- Interactive
Supply Curve – Shifting the Curve
shift; government interference. Cram.com tutorial
Session Activities Equilibrium Curve – Shifting the College- Interactive
Readings Curve Cram.com tutorial
Read the recitation notes, which cover new content that adds to and Government Intervention and College-
supplements the material covered in lecture. Economics: Price Ceiling Cram.com
Recitation: Supply-Demand Analysis (PDF) Government Intervention and College-
Before watching the lecture video, read the course textbook for an Economics: Price Floor Cram.com
introduction to the material covered in this session:
[R&T] Chapter 3, "Demand and Supply." elasticityession Overview
[R&T] Chapter 4, "Applications of Demand and Supply." Everyone knows the unpleasant feeling that results from the price of
Sections 4.1-4.2. something you've been longing to buy increasing – or the excitement
[Perloff] Chapter 2, "Supply and Demand." (optional) of seeing your favorite snack go on sale! When the price of a good
Lecture Videos changes, consumers' demand for that good changes. We can
View Full Video understand these changes by graphing supply and demand curves and
o Lecture 2: Applying Supply and Demand (00:49:07) analyzing their properties.
o Transcript - PDF English - US Toilet paper is an example of an elastic good. Image courtesy of Nic
o Subtitle - SRT (English - US) Stage on Flickr.
View by Chapter Keywords: Elasticity; revenue; empirical economics; demand
oOverview of Supply and Demand (0:04:16) elasticity; supply elasticity.
o Impact of a Demand Shift (0:07:15) Session Activities
o Impact of a Supply Shift (0:02:58) Readings
o Government Interference: The Labor Market Before watching the lecture video, read the course textbook for an
(0:08:26) introduction to the material covered in this session:
o Government Interference: Gasoline Prices (0:04:57) [R&T] Chapter 5, "Elasticity: A Measure of Response."
o Costs and Benefits of Government Intervention [Perloff] Chapter 3, "Applying the Supply-and-Demand
(0:12:39) Model." (optional)
Lecture Videos problem solving techniques for approaching similar questions on the
View Full Video problem set and exams.
o Lecture 3: Elasticity (00:47:58) View Full Video
o Transcript - PDF English - US o Problem 3 Solution Video (00:15:20)
o Subtitle - SRT (English - US) o Transcript - PDF English - US
View by Chapter o Subtitle - SRT (English - US)
o The Elasticity of Supply and Demand (0:15:02) View by Chapter
o Using Empirical Economics to Determine Elasticity o Part A (0:03:51)
(0:10:06) o Part B (0:03:23)
o Elasticity and Taxation (0:11:09) o Part C (0:03:17)
o Elasticity and Medical Care (0:11:37) o Part D (0:04:46)
Resources View Full Video
Graphs and Figures (PDF) o Problem 4 Solution Video (00:15:15)
o Transcript - PDF English - US
Check Yourself o Subtitle - SRT (English - US)
Concept Quiz View by Chapter
This concept quiz covers key vocabulary terms and also tests your
o Part A (0:07:35)
intuitive understanding of the material covered in this session. o Part B (0:07:38)
Complete this quiz before moving on to the next session to make sure
you understand the concepts required to solve the mathematical and
graphical problems that are the basis of this course.
Question 1 of 5 2 Consumer th
Which of the following accurately characterize perfectly inelastic The second unit of the course introduces you to the analysis of
demand? consumer behavior. The decisions that individuals make about what
and how much to consume are among the most important factors that
1. The demand curve is vertical but does not change shape the evolution of the overall economy, and we can analyze these
regardless of what happens to price. decisions in terms of their underlying preferences. You will learn how
2. The demand curve is horizontal. to model consumer preferences in a utility function, and use this utility
function to make predictions about what consumers will do when they
3. The demand curve is vertical. have a given income and can buy goods at a given price. You will also
4. Demand does not change regardless of what happens to learn how to analyze the decision of whether and how much
price. more individuals choose to work.
Further Study Prefernces nd utility
These optional resources are provided for students that wish to explore Behind every supply and demand curve is an army of producers and
this topic more fully. consumers making their own decisions. For consumers, their
Textbook Study Materials decisions are driven, quite simply, by what they want! All consumers
See the [Perloff] chapter for the topics covered, as well as quizzes, make decisions to maximize their utility. In this lecture, we will learn
applications, and other related resources. about utility, how to define it and how we represent it
Chapter 3 mathematically.
How does each slice of pizza you consume impact your utility for the
Other OCW and OER Content next? Image courtesy of William Jones on Flickr.
CONTENT PROVIDER NOTES
Keywords: Consumer theory; preference assumptions; indifference
College- Interactive curves; utility functions; marginal utility.
Price Elasticity of Supply
Cram.com tutorial
Session Activities
Price Elasticity of Demand – College- Interactive
Readings
Standard Cram.com tutorial
Read the recitation notes, which cover new content that adds to and
supplements the material covered in lecture.
Problem set Recitation: Calculating Elasticities (PDF)
Before watching the lecture video, read the course textbook for an
The problem set is comprised of challenging questions that test your introduction to the material covered in this session:
understanding of the material covered in the course. Make sure you
[R&T] Chapter 7, "The Analysis of Consumer Choice."
have mastered the concepts and problem solving techniques from the
Sections 7.1, 7.2.1-2, and 7.3.2.
following sessions before attempting the problem set:
[Perloff] Chapter 4, "Consumer Choice." (optional)
Introduction to Microeconomics
Lecture Videos
Applying Supply and Demand
View Full Video
Elasticity
o Lecture 4: Preferences and Utility (00:48:10)
Problem Set and Solutions o Transcript - PDF English - US
Problem Set Questions (PDF) o Subtitle - SRT (English - US)
Problem Set Solutions (PDF) View by Chapter
Problem Solving Video o Introduction to Consumer Theory (0:04:39)
In the video below, a teaching assistant demonstrates his approach to o Consumer Preference Assumptions (0:04:52)
the solution for problems 1 and 4 from the problem set. The teaching o Properties of Indifference Curves (0:10:26)
assistant notes common mistakes made by students and provides o Utility Functions (0:03:15)
o Marginal Utility (0:04:18)
o Marginal Rate of Substitution (0:15:34) Transformation (0:10:12)
Resources o
Shocking the Budget Constraint (0:04:47)
Graphs and Figures (PDF) o Constrained Utility Maximization: Graphical
Analysis (0:06:44)
Check Yourself o Constrained Utility Maximization: Mathematical
Concept Quiz Derivation (0:14:16)
This concept quiz covers key vocabulary terms and also tests your o Corner Solutions (0:03:03)
intuitive understanding of the material covered in this session. o Applying Constrained Utility Maximization
Complete this quiz before moving on to the next session to make sure (0:07:06)
you understand the concepts required to solve the mathematical and
Resources
graphical problems that are the basis of this course.
Graphs and Figures (PDF)
Question 1 of 5 Check Yourself
Which of the following is NOT an assumption that we make about Concept Quiz
consumer preferences? This concept quiz covers key vocabulary terms and also tests your
intuitive understanding of the material covered in this session.
1. Downward-sloping.
Complete this quiz before moving on to the next session to make sure
2. Transitivity. you understand the concepts required to solve the mathematical and
graphical problems that are the basis of this course.
3. Non-satiation.
4. Completeness. Question 1 of 5
Further Study Which of the following concepts is equivalent to the marginal rate of
transformation between two goods?
These optional resources are provided for students that wish to explore
this topic more fully. 1. The rate at which you can turn one good into the other
Textbook Study Materials good in the marketplace.
See the [Perloff] chapter for the topics covered, as well as quizzes,
2. The slope of the budget constraint.
applications, and other related resources.
Chapter 4 3. None of these.
Other OCW and OER Content 4. The ratio of the prices of the two goods.
CONTENT PROVIDER NOTES
Further Study
"Axioms of Consumer These optional resources are provided for students that wish to explore
Alternative notes
Preference and the Theory of this topic more fully.
MIT with an advanced
Choice." Lec #3 in 14.03 Textbook Study Materials
OpenCourseWare theoretical
Microeconomic Theory and See the [Perloff] chapter for the topics covered, as well as quizzes,
approach.
Public Policy, Fall 2010. applications, and other related resources.
Chapter 4
budget constraint Problema set 2
Life would be easy if it was just a question of deciding what we
Life would be easy if it was just a question of deciding what we would like most. The answer would probably be more of
would like most. The answer would probably be more of everything! Of course, economic decisions are not that simple, and
everything! Of course, economic decisions are not that simple, and the reason is that we are constrained in what we can choose:
the reason is that we are constrained in what we can choose: constrained by the amount of income, the amount of time, or any
constrained by the amount of income, the amount of time, or any one of a number of factors. In this lecture we will analyze how
one of a number of factors. In this lecture we will analyze how consumers make choices when they face a budget constraint.
consumers make choices when they face a budget constraint. Our monetary income constrains our consumption. Image courtesy
Our monetary income constrains our consumption. Image courtesy of allison.johnston on Flickr.
of allison.johnston on Flickr. Keywords: Budget constraints; marginal rate of transformation;
Keywords: Budget constraints; marginal rate of transformation; opportunity cost; constrained utility maximization; corner solutions.
opportunity cost; constrained utility maximization; corner solutions. Session Activities
Session Activities Readings
Readings Before watching the lecture video, read the course textbook for an
Before watching the lecture video, read the course textbook for an introduction to the material covered in this session:
introduction to the material covered in this session: [R&T] Chapter 7, "The Analysis of Consumer Choice."
[R&T] Chapter 7, "The Analysis of Consumer Choice." Sections 7.3.
Sections 7.3. [Perloff] Chapter 4, "Consumer Choice." (optional)
[Perloff] Chapter 4, "Consumer Choice." (optional) Lecture Videos
Lecture Videos View Full Video
View Full Video o Lecture 5: Budget Constraints (00:46:14)
o Lecture 5: Budget Constraints (00:46:14) o Transcript - PDF English - US
o Transcript - PDF English - US o Subtitle - SRT (English - US)
o Subtitle - SRT (English - US) View by Chapter
View by Chapter o Budget Constraints and the Marginal Rate of
o Budget Constraints and the Marginal Rate of Transformation (0:10:12)
o
Shocking the Budget Constraint (0:04:47) View by Chapter
o
Constrained Utility Maximization: Graphical o Review: Income and Substitution Effects (0:10:10)
Analysis (0:06:44) o The Labor-Leisure Tradeoff (0:07:33)
o Constrained Utility Maximization: Mathematical o Impact of Wage Changes on Labor-Leisure Tradeoff
Derivation (0:14:16) (0:08:43)
o Corner Solutions (0:03:03) o Determinants of Labor Supply: Change in
o Applying Constrained Utility Maximization Consumption (0:14:15)
(0:07:06) o Impact of Labor Supply on Unemployment
Resources (0:09:38)
Graphs and Figures (PDF) Resources
Graphs and Figures (PDF)
Check Yourself
Tables (PDF)
Concept Quiz
This concept quiz covers key vocabulary terms and also tests your View Full Video
intuitive understanding of the material covered in this session. o Lecture 8a: Applying Consumer Theory: Child
Labor (00:13:38)
Complete this quiz before moving on to the next session to make sure
o Transcript - PDF English - US
you understand the concepts required to solve the mathematical and
o Subtitle - SRT (English - US)
graphical problems that are the basis of this course.
Resources
Question 1 of 5 Graphs and Figures (PDF)
Which of the following concepts is equivalent to the marginal rate of Check Yourself
transformation between two goods? Concept Quiz
1. The rate at which you can turn one good into the other This concept quiz covers key vocabulary terms and also tests your
good in the marketplace. intuitive understanding of the material covered in this session.
Complete this quiz before moving on to the next session to make sure
2. The slope of the budget constraint. you understand the concepts required to solve the mathematical and
3. None of these. graphical problems that are the basis of this course.
3. Country 2.
Practice Exams
Once you are comfortable with the course content, complete the
4. Both countries. following practice exams. These exams are from Professor William
2 Wheaton's course site, 14.01 Principles of Microeconomics, Fall
Now that we understand what the cost and benefits are of different 2007, and are used with permission.
consumption and investment decisions over time, we can understand Practice Final Exam Problems (PDF)
how both firms and individual consumers make decisions about how Practice Final Exam Solutions (PDF)
much to invest in different types of opportunities. In this lecture, we Exam Problems and Solutions
will discuss how individuals make major decisions, such as whether to The exam should be completed in 3 hours. This is a closed book
attend college and how much to save for retirement. exam. You are not allowed to use notes, equation sheets, books or any
The savings of individuals drive the growth of our economy. Image other aids.
courtesy of B3OK on Flickr. Final Exam Problems (PDF)
Keywords: Investment decisions; net present value; discount rate; Final Exam Solutions (PDF)
subsidized retirement savings programs.
Session Activities
Readings
Before watching the lecture video, read the course textbook for an
introduction to the material covered in this session:
[R&T] Chapter 13, "Interest Rates and the Markets for Capital and
Natural Resources."
[Perloff] Chapter 16, "Interest Rates, Investments, and Capital
Markets." (optional)
Lecture Videos
View Full Video
o Lecture 22: Capital Supply and Markets II (00:47:31)
o Transcript - PDF English - US
o Subtitle - SRT (English - US)
View by Chapter
o Determining Savings Decisions Over Time (0:06:56)