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Chapter 4: The Market Forces of Supply and Demand

Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)


January 7

Don Cheadle on Inferior Goods

Actor Don Cheadle gives a clear illustration of inferior goods.

Textbook References:

Pages 69-72 “Shifts in the Demand Curve”

October 15

Roth and Shapley

Al Roth and Lloyd Shapley were awarded the 2012 Nobel Prize in Economics for their work on market design when prices may not be the best way to match buyers and sellers. Mankiw provides a link to one of Roth's papers, "Repugnance as a Constraint on Markets."

Textbook References:

Page 84 “Conclusion: How Prices Allocate Resources”

April 3

Bertrand Competition

Competition is good for consumers.

Textbook References:

Pages 66-67 “What Is Competition?”
Pages 351-352 “Competition, Monopolies, and Cartels”

April 4

A Cartoon for Chapter 4

A cartoon presents a humorous look at supply and demand.

Textbook References:

Chapter 4 “The Market Forces of Supply and Demand”

March 25

Even terrorists have downward-sloping demand curves

Terrorists consider prices when choosing a destination.

Textbook References:

Pages 67-68 “The Demand Curve: The Relationship between Price and Quantity Demanded”

February 8

On Comparative Advantage, Imperfect Information, and Boston Weather

Why did Mankiw shovel snow off of his roof instead of hiring someone else to do it?

Textbook References:

Pages 58 “Should Tiger Woods Mow His Own Lawn?”
Page 84 “Price Increases After Natural Disasters”

December 16

The Economics of Seinfeld

Clips from the TV show "Seinfeld" are used to illustrate a variety of economic concepts.

Textbook References:

Pages 4-5 “Principle 1: People Face Trade-offs”
Pages 5-6 “Principle 2: The Cost of Something is What You Give Up to Get It”
Page 6 “Principle 3: Rational People Think at the Margin”
Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Chapter 3 “Interdependence and the Gains from Trade”
Pages 67-72 “Demand”
Pages 73-76 “Supply”
Pages 144-153 “Controls on Prices”
Chapter 10 “Externalities”
Pages 226-227 “The Different Kinds of Goods”
Pages 227-232 “Public Goods”
Pages 230-232 “The Difficult Job of Cost-Benefit Analysis”
Pages 232-237 “Common Resources”
Pages 274-275 “Fixed and Variable Costs”
Page 281 “Economies and Diseconomies of Scale”
Pages 312-315 “Why Monopolies Arise”
Chapter 16 “Monopolistic Competition”
Pages 370-378 “The Economics of Cooperation”
Pages 399-400 “The Supply of Labor”
Page 414 “Compensating Differentials”
Page 442 “Utility”
Page 465 “Utility: An Alternative Way to Describe Preferences and Optimization”
Pages 484-489 “Asymmetric Information”
Pages 556-558 “Technological Knowledge”
Pages 578-580 “Financial Intermediaries”
Pages 598-600 “Present Value: Measuring the Time Value of Money”
Pages 603-604 “Diversification of Firm-Specific Risk”
Pages 606-609 “The Efficient Market Hypothesis”
Pages 630-631 “The Economics of Unions”
Pages 703-705 “The Prices for International Transactions: Real and Nominal Exchange Rates”
Pages 707-708 “The Basic Logic of Purchasing Power Parity”
Page 833 “Time Inconsistency”

September 2

Cash for Clunkers

Jeff Jacoby argues that the Car Allowance Rebate System (Cash for Clunkers) drove up the price of used cars by over ten percent. That's because it required the destruction of cars that were traded. It also did not have an appreciable effect on carbon emissions.

Textbook References:

Pages 10-12 “Principle 7: Governments Can Sometimes Improve Market Outcomes”
Pages 80-81 “Example: A Change in Market Equilibrium Due to a Shift in Supply”

August 12

A Challenge to Extreme Keynesians

Casey Mulligan suggests that the rise in summer teenage employment, even in a deep recession, offers evidence contrary to the demand-constrained Keynesian story.

Textbook References:

Pages 80-81 “Example: A Change in Market Equilibrium Due to a Shift in Supply”
Pages 400-402 “Shifts in Labor Supply”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”

December 30

Why Health Consumers Aren't Cost Conscious

Out-of-pocket costs for health-care have fallen to 12% of total spending on health-care.

Textbook References:

Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 67-68 “The Demand Curve: The Relationship Between Price and Quantity Demanded”

November 17

Flier on Healthcare Reform

The dean of Harvard's medical school argues that the proposed healthcare reforms will increase costs without improving access or quality.

Textbook References:

Page 80 “Figure 10: How an Increase in Demand Affects the Equilibrium”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Chapter 4: The Market Forces of Supply and Demand
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