The monopoly markup

Note: This is post #48 in a weekly video series on basic microeconomics. Ever wonder why pharmaceuticals are so expensive? In this video by Marginal Revolution University, Alex Tabarrok shows how low elasticity of demand results in monopoly markups. Continue Reading...

The balance of industries and creative destruction

Note: This is post #46 in a weekly video series on basic microeconomics. Why are price signals and market competition so important to a market economy? When prices accurately signal costs and benefits and markets are competitive, the Invisible Hand ensures that costs are minimized and production is maximized, explains Alex Tabarrok. Continue Reading...

Entry, exit, and supply curves: Constant costs

Note: This is post #45 in a weekly video series on basic microeconomics. Industries that have a flat supply curve are called “constant cost” industries. An example is domain name registration: to increase the supply of domain names, we must only increase the inputs by a negligible amount. Continue Reading...

Entry, exit, and supply curves: Increasing Costs

Note: This is post #44 in a weekly video series on basic microeconomics. As industry’s output increases, what happens to costs? Alex Tabarrok of Marginal Revolution University look at three options: an increasing cost industry, a constant cost industry, and a decreasing cost industry. Continue Reading...

Maximizing profit and the average cost curve

Note: This is post #43 in a weekly video series on basic microeconomics. For companies, being able to predict expected profits—or expected losses—is a very useful tool. In this video by Marginal Revolution University, Alex Tabarrok introduces the third concept you need to maximize profit — average cost. Continue Reading...

Maximizing profit under competition

Note: This is post #42 in a weekly video series on basic microeconomics. In a competitive market, a company can’t control how much they charge for goods and services. So how do firms maximize profits when they don’t control prices? Continue Reading...