Calendar2+-+Markets+and+Elasticities

=__**September 24**__**:** Demand (Syllabus Section 1.1)=

lecture notes


 * __Homework__: Read Mankiw (Chapter 4 - demand section) and watch the following videos.
 * **The Law of Demand (Part 1)**
 * media type="youtube" key="W1s3-BT8l9c" height="315" width="420"
 * **The Law of Demand (Part 2)**
 * media type="youtube" key="qbL5EmiWytk" height="315" width="420"
 * **The Determinants of Demand**
 * media type="youtube" key="hqKOr6H_YFE" height="315" width="560"
 * **Linear Demand Equations (Part 1)**
 * media type="youtube" key="gTUIDYLOOJA" height="315" width="560"
 * **Linear Demand Equations (Part 2)**
 * media type="youtube" key="FLgZVYWIvQM" height="315" width="560"
 * **Linear Demand Equations (Part 3)**
 * media type="youtube" key="fEEnEf6TZIw" height="315" width="560"
 * **Deriving Demand and Supply Equations from Data**
 * media type="youtube" key="ViHxHtavrO4" height="315" width="560"
 * media type="youtube" key="FfvPwmqa_A0" height="315" width="560"
 * __Khan Academy__
 * [|The law of demand]
 * [|Demand the the price of related goods (substitutes and complements)]
 * [|Determinants of demand (income, number of buyers, and preferences)]
 * [|Normal and inferior goods]
 * [|More on inferior goods (clarifying some misconceptions from first one)]
 * [|Marginal utility]
 * [|Equalizing marginal utility per dollar spent]
 * [|Demand and marginal utility]
 * [|Budget lines]
 * [|Optimal point on a budget line]
 * [|Types of indifference curves]


 * __Assessments and A__ __ ctivities __ : Lecture on demand (PDF below)
 * [[file:Demand.pdf]]


 * __Related Readings__
 * [|Demand]

=**September 26:**=

** In-class activity: **Use the linear demand function for cappuccinos, ** Qd = 500 – 25P ** to answer the questions that follow:
 * Continuation of the previous lesson on Demand:**
 * 1) Create a demand schedule for cappuccinos with the prices of $0, $1, $3, $5, $7 and $9
 * 2) Create a demand curve for cappuccinos, plotting the points from your demand schedule.
 * 3) Assume the price of latte machiatos, a close substitute for cappuccinos, decreases, and causes the // a // variable in the demand function to fall to 300. Create a new demand schedule, with the adjusted values for Qd.
 * 4) On your previous diagram, illustrate the new demand curve.
 * 5) Assume that due to falling incomes, cappuccino consumers become more sensitive to changes in the price of cappuccinos, and the // b //variable in the original demand function increases to 40. Using the same prices, create a new demand schedule.
 * 6) On the same graph as your original demand curve, illustrate the new demand for cappuccinos following the decline in consumers’ [|incomes].

=September 30:Supply (Syllabus Section 1.1)=


 * __Homework Due__: Read Mankiw ( Chapter 4 - Supply section) and watch the following videos.- in class activity from the previous lesson
 * **Linear supply equations (Part 1)**
 * media type="youtube" key="ie7zieuJWfo" height="315" width="560"
 * **Linear supply equations (Part 2)**
 * media type="youtube" key="_9IHKU4mg68" height="315" width="560"
 * **Linear supply equations (Part 3)**
 * media type="youtube" key="_9IHKU4mg68" height="315" width="560"
 * __Khan Academy__
 * [|The law of supply]
 * [|Determinants of supply]

> >>> >>>
 * __Assessments and Activities__: Free-response/problem and lecture
 * __ //Free-response/problem/// __: You will work cooperatively with your partner to construct a response to the following prompt.
 * Define demand and explain three reasons that the demand curve is downward sloping.
 * __//Lecture//__: Supply (PDF below)
 * [[file:Supply.pdf]]


 * __Related Readings__
 * __[|Supply]__
 * __[|Productivity]__
 * [|Competition]
 * [|Creative Destruction]
 * [|Profits]
 * [|Innovation]
 * [|Corporations]
 * [|Airline Deregulation]
 * [|Surface Freight Transportation Deregulation]
 * [|Government Growth]
 * [|Housing]

=__**October 2**__**:** Equilibrium - the interaction of supply and demand (Syllabus Section 1.1)=


 * __Homework Due__: Mankiw (Chapter 4 - Supply and Demand Together section) and watch the following videos.


 * [|Finding price and quantity using linear supply and demand equations]
 * [|Why are markets efficient?]
 * __Khan Academy__
 * [|Market equilibrium]
 * [|Changes in market equilibrium]
 * [|Changes in market equilibrium]


 * http://www.youtube.com/watch?feature=player_embedded&v=ViHxHtavrO4

>>
 * read the this the following article:
 * http://www.telegraph.co.uk/news/worldnews/asia/china/6663201/Swine-flu-fear-leads-to-shortage-of-garlic-in-China.html
 * read the attached analysis

>> >> >>
 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.
 * __A survey shows an increase in drug use by young people. In the ensuing debate, two hypotheses are proposed__: Reduced police efforts have increased the availability of drugs on the street. Cutbacks in education efforts have decreased awareness of the dangers of drug addiction.
 * 1) Explain how reduced police efforts would increase the quantity of drugs consumed by youth, using what you know about the concepts of supply and demand.
 * 2) Explain how the cutbacks in education would lead to an increase in the quantity of drugs consumed by youth, using what you know about the concepts of supply and demand.
 * 3) __Bonus__: How could information on what has happened to the price of drugs help us to distinguish between these explanations?
 * Equilibrium (PDF below)
 * [[file:Equilibrium.pdf]]


 * __Related Readings__
 * __[|Bubbles]__
 * [|Efficient Markets Theory]
 * [|Stock Market]

=__**October 4:**__ **Quiz Revision on Supply, Demand and Elasticity**=


 * __October 8:__ section 1.1 quiz **

=__**October 14**__**:** Elasticities (Syllabus Section 1.2)=


 * __Homework Due__: Read Mankiw (Chapter 5) and watch the following video.
 * Download the attached workbook and complete it by next week
 * [[file:ELASTICITY workbook.doc]]
 * READ attached document
 * [[file:5 - Price Elasticity of Demand.pdf]]
 * [|Introduction to PED and Calculating PED]
 * __Khan Academy__
 * [|Price elasticity of demand]
 * [|More on elasticity of demand]
 * [|Perfectly elastic and perfectly inelastic goods]
 * [|Constant unit elasticity]


 * __Assessments and Activities__: Free-response/problem and lecture

>>
 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * __//Lecture//__: Price Elasticity of Demand
 * [[file:elastisity_new.ppt]]

__** October 16: **__ = =
 * __Elasticities Continued...__**
 * read attached article on PED
 * [[file:understanding-PED.pdf]]


 * __ October 18: __**


 * __**Elasticities questions:**__


 * __**Bring your elasticities workbook with you.**__


 * **__Resources__**
 * [[file:Price Elasticity of Supply.docx]]
 * [[file:understanding-PED.pdf]]
 * [[file:PES.pptx]]
 * __**Elasticities revision questions:**__
 * [[file:ElasticityPractice.pdf]]

=__**October**__ 22**:** The total-revenue test and other elasticities (Syllabus Section 1.2) =


 * __Homework Due__: Read Mankiw (Chapter 5 - Three applications of supply, demand and elasticity section) and watch the following videos.
 * [|PED and the Total Revenue Test]
 * __Khan Academy__
 * [|Total revenue and elasticity]
 * [|More on total revenue and elasticity]
 * [|Cross Elasticity of Demand]
 * [|Elasticity of Supply]
 * [|Elasticity and strange percent changes]


 * __Assessments and Activities__: Free-response problem and lecture


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * Assume that the market for cigarettes is composed of two groups: those who have never smoked and are not addicted and those who have smoked and are addicted. Now assume that the the government permanently raises the price of cigarettes.


 * 1) Draw a diagram illustrating the effect of the increase in price in the market for addicted smokers.
 * 2) Draw another diagram illustrating the effect of the increase in price in the market for non-smokers.
 * 3) Explain why the outcome in each market is different.


 * Review attached before answering the questions
 * [[file:6 - Total Revenue Test, Income and Cross-elasticity and elasticity of supply.pdf]]
 * other activities
 * [[file:understanding-PED.pdf]]

= =

=__NOV 5__ **:** Consumers, producers and the efficiency of markets (Syllabus Section 1.2) =

__ Homework Due __ : Read Mankiw (Chapter 7) and watch the following videos.
 * media type="youtube" key="Rx5cdU_u6kQ" height="315" width="560"
 * media type="youtube" key="EBifN69gcKY" height="360" width="640"
 * __Khan Academy__
 * [|The demand curve as a marginal benefit curve]
 * [|Consumer surplus]
 * [|Producer surplus]
 * [|Total surplus]


 * __Assessments and Activities__: Free-response/problem and lecture


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * __ Several years ago, flooding along the Missouri and the Mississippi Rivers destroyed thousands of acres of wheat __.


 * 1) Farmers whose crops were destroyed by the floods were much worse off, but farmers whose crops were not destroyed benefited from the floods. Explain why.
 * 2) What information would you need about the market for wheat to assess whether the total revenue of farmers increased or decreased as a result of this event?


 * __//Lecture//__: Consumer surplus, producer surplus, total surplus, and the efficiency of markets (PDF below)


 * __We will use this one in class__: [[file:Market_Efficiency_CS+PS.pdf]]
 * __This is more detailed, has more math and may be helpful to deepen your understanding__: [[file:Efficiency of Markets - CS and PS.pdf]]


 * __Related Readings__
 * [|Efficiency]
 * [|Information and Prices]
 * [|Capital Gains Taxes]
 * [|Corporate Income Tax]
 * [|Efficient Capital Markets]
 * [|Insider Trading]
 * [|Market for Corporate Control]
 * [|Stock Markets]
 * [|Intellectual Property]
 * [|The Internet and the Role of Information]
 * [|Privatization]

=__Nov 7&13__ **:** P rice controls, taxes and subsides on equilibrium and economic efficiency (Syllabus Section 1.2) =


 * __Homework Due__: Read Mankiw (Chapter 6) and watch the following videos.
 * **Determining the Effects of Price Ceilings and Price Floors**
 * media type="youtube" key="wbU6TdrnqmU" height="315" width="560"
 * **Calculating the Effects of Price Controls Using Linear Supply and Demand Functions**
 * media type="youtube" key="kjBTP1_x9pk" height="315" width="560"
 * ** The Effects of an Excise Tax (Part 1) **
 * media type="youtube" key="6mdSmVJi_2s" height="315" width="560"
 * ** The Effects of an Excise Tax (Part 2) **
 * media type="youtube" key="QbdFe3Cku3Y" height="315" width="560"
 * ** Using Linear Equations to Determine the Burdens of an Excise Tax **
 * media type="youtube" key="-Z1oMprCVz8" height="315" width="560"
 * **The Effects of a Per Unit Subsidy**
 * media type="youtube" key="NWje0rUThC8" height="315" width="560"
 * **Calculating the Effects of a Per Unit Subsidy Using Linear Equations**
 * media type="youtube" key="W4UqZAfJQL0" height="315" width="560"
 * __Khan Academy__
 * [|Rent control and dead weight loss]
 * [|Minimum wage and price floors]
 * [|Taxation and dead weight loss]
 * [|Percentage tax on hamburgers]
 * [|Taxes and perfectly inelastic goods]
 * [|Taxes and perfectly elastic goods]


 * __Assessments and Activities__: Free-response/problem


 * //__Homework:__// You will work cooperatively with your partner to construct a response to the following prompt.


 * __Suppose a technological advance reduces the cost of making computers__.


 * 1) Draw a supply and demand graph to show what happens to price, quantity, consumer surplus and producer surplus in the market for computers. Explain how the invisible hand moves the market to its most efficient outcome and why this is socially optimal.
 * 2) Computers and adding machines are substitutes. Use a supply and demand diagram to show what happens to price, quantity, consumer surplus and producer surplus in the market for adding machines. Should adding machine producers be happy or sad about the technological advance in computers.
 * 3) Computers and software are complements. Use a supply and demand diagram to show what happens to price, quantity, consumer surplus and producer surplus in the market for adding machines. Should software producers be happy or sad about the technological advance in computers.


 * __//Lecture//__: Price controls and taxes (PDF below)
 * [[file:Price_Controls_Taxes_Subsidies.pdf]]
 * [[file:1.3 Government Intervention.pdf]]


 * __Related Readings__
 * __[|Price Controls]__
 * [|Taxation]
 * [|Marginal Tax Rates]
 * [|Consumption Tax]
 * [|Agricultural Subsidy Programs]
 * [|Minimum Wage]
 * [|Price Controls on Natural Gas]
 * [|Rent Control]

=__Nov__ **:** Markets and Elasticities Math=


 * __Homework Due__: Watch the following videos again, take notes, and be prepared to use them in doing today's in-class problems.
 * [|Linear demand equations (Part 1)]
 * [|Linear demand equations (Part 2)]
 * [|Linear demand equations (Part 3)]
 * [|Linear supply equations (Part 1]
 * [|Linear supply equations (Part 2)]
 * [|Linear supply equations (Part 3)]
 * [|Deriving demand and supply equations from data]
 * [|Finding price and quantity using linear supply and demand equations]
 * [|Calculating the Effects of Price Controls Using Linear Supply and Demand Functions]
 * [|Calculating the Effects of a Per Unit Subsidy Using Linear Equations]


 * __Assessments and Activities__: Free-response/problem
 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * Explain why economists usually oppose controls on prices.


 * [[file:intervention.pdf]]

=November 18: Quiz revision on 1.4=

//__**SL: SL students are only required to know the INDIRECT TAXES, SUBSIDY AND PRICE CONTROL. however they are not required to know any of the calculations involved. Also they are not required to know market outcomes and social welfare associated with indirect taxes and subsidy.**__//
 * [[file:HL_SL_Exam_Q.docx]]
 * Answers to hand-out
 * [[file:answers_gov_intervention.docx]]
 * for those of you who had difficulty with PS and CS on the Perfectly elastic and inelastic demand and supply, watch the following videos
 * media type="custom" key="21524284"
 * media type="custom" key="21524606"
 * [[file:espresso_tax_pes_elastic_inelastic.pdf]]
 * [[file:pes_ped_tax_incidence.pdf]]
 * [[image:http://upload.wikimedia.org/wikipedia/en/thumb/e/e9/Maximum_taxation_with_perfectly_inelastic_supply.svg/350px-Maximum_taxation_with_perfectly_inelastic_supply.svg.png width="350" height="350" caption="File:Maximum taxation with perfectly inelastic supply.svg"]]
 * http://mikeroeconomics.blogspot.com/2012/06/tan-tax.html
 * http://mikeroeconomics.blogspot.com/2012/06/tan-tax.html

=__November__ 20**: quiz** on "Markets and Elasticities" (Papers 1)=