Learning path
A company's market: pricing power, taxes and trade
Elasticity and pricing power, who really bears a tax or a price cap, how trade and tariffs create winners and losers, and what drives long-run growth.
15 lessons, about 77 minutes in all. Take them in order.
- Price elasticity of demand 6 min
How strongly buyers respond to a price change, what makes demand elastic or inelastic, and how to measure it with the midpoint method.
- Elasticity and total revenue 5 min
Why raising a price can increase or decrease what sellers take in, and three of Mankiw's puzzles solved with elasticity.
- Consumer and producer surplus 4 min
How economists measure what buyers and sellers gain from a market, using willingness to pay and cost.
- Market efficiency 5 min
Why a competitive market's equilibrium makes total surplus as large as it can be, and the limits of that result.
- Price ceilings and floors 6 min
What happens when the law caps or props up a price, with rent control, petrol queues and the minimum wage as Mankiw's examples.
- Who really pays a tax 5 min
Why a tax's burden is shared between buyers and sellers whoever hands it over, and why the less elastic side pays more.
- Deadweight loss 5 min
Why a tax costs buyers and sellers more than it raises, and what makes that extra loss large or small.
- How tax size changes the loss 5 min
Why doubling a tax quadruples its deadweight loss, why revenue first rises then falls, and the debate over the Laffer curve.
- Absolute and comparative advantage 5 min
Why the person who is better at everything still gains from trade, worked through with Mankiw's farmer and rancher.
- Why trade helps both sides 5 min
How specialising and trading lets both partners consume more, what price makes a trade worth it, and why it applies to countries.
- Winners and losers from trade 5 min
Who gains and who loses when a country opens to trade, and why the gains outweigh the losses.
- Tariffs and quotas 5 min
What a tariff or import quota does to prices, producers, consumers and total surplus, and the arguments for and against restricting trade.
- What makes productivity grow 5 min
Why living standards depend on productivity, and the four things that determine how much a worker can produce.
- Growth policy 5 min
What governments can do to raise productivity, from saving and education to property rights, trade and research, and the debate over population.
- Why unemployment exists 6 min
The four reasons Mankiw gives for an economy's natural rate of unemployment: job search, minimum wages, unions and efficiency wages.