A price is a signal wrapped up in an incentive

Note: This is post #15 in a weekly video series on basic microeconomics. The price system allows for people with dispersed knowledge and information to coordinate global economic activity. The global production of roses, for example, reveals how the price system is emergent, and not the product of human design. Continue Reading...

A ‘Pinocchio’ Rating for Pope Francis

Sandro Magister, Vatican correspondent for L’Espresso, notes in his Italian blog a recent TV program that “fact checks” the pope’s economics. Here’s a translation of the blog post: In his speeches Pope Francis often puts forth original theories of dubious foundations but that, for him, are of unshakable certainty and explain everything. Continue Reading...

What you should know about subsidies

Note: This is post #13 in a weekly video series on basic microeconomics. What is a subsidy? A subsidy is really just a negative or reverse tax, explains Alex Tabarrok. Instead of collecting money in the form of a tax, the government gives money to consumer or producers. Continue Reading...

Understanding tax revenue and deadweight loss

Note: This is post #12 in a weekly video series on basic microeconomics. Why do taxes exist? What are their effects? In this video by Marginal Revolution University, economist Alex Tabarrok explains how taxes affect consumer surplus and producer surplus. Continue Reading...

Who pays the tax?

Note: This is the eleventh post in a weekly video series on basic microeconomics. Who bears the burden of a tax, the buyer or the seller? Or what about the health insurance mandate in Obamacare—does the employer or the worker pay the tax? Continue Reading...

Understanding commodity taxes

Note: This is the tenth post in a weekly video series on basic microeconomics. In this video Tyler Cowen covers commodity taxes, including who pays the tax and lost gains from trade, also called deadweight loss. Continue Reading...

Understanding elasticity of Demand

Note: This is the eighth post in a weekly video series on basic microeconomics. Prices can have an effect on the demand of goods and services. But how much does quantity demanded change when prices changes? Continue Reading...

Does the equilibrium model work in the real world?

Note: This is the seventh post in a weekly video series on basic microeconomics. In previous videos in this series from Marginal Revolution University we learned how prices reach equilibrium and how the market works like an invisible hand coordinating economic activity. Continue Reading...