Principles of Economics: Microeconomics

What you will learn

By taking this free microeconomics course, you’ll be exposed to the economic way of thinking. You’ll understand how to use economics in your life and, ultimately, see the world differently.

We’ll cover fundamental microeconomics concepts like supply and demand and equilibrium. We’ll also answer questions such as: How are prices determined? What did Adam Smith mean when he said the market process works like an “invisible hand”? How is it that we have access to fresh roses in very chilly cities every Valentine’s Day? We will cover all the key topics including competition, monopoly, price discrimination, externalities, public goods and more.

There are no prerequisites to this course and it is accessible to a beginner.

1. Introduction

Introduction to Microeconomics

2. Supply, Demand, and Equilibrium

The Demand Curve

The Supply Curve

The Equilibrium Price and Quantity

A Deeper Look at the Demand Curve

The Demand Curve Shifts

Change in Demand vs. Change in Quantity Demanded

A Deeper Look at the Supply Curve

The Supply Curve Shifts

Exploring Equilibrium

Supply and Demand Terminology

Does the Equilibrium Model Work?

3. Elasticity and Its Applications

Elasticity of Demand

Calculating the Elasticity of Demand

Office Hours: Elasticity of Demand

Elasticity of Supply

Elasticity and Slave Redemption

Applications Using Elasticity

4. Taxes and Subsidies

Commodity Taxes

Who Pays the Tax?

Tax Revenue and Deadweight Loss

Subsidies

Wage Subsidies

5. The Price System

I, Rose

A Price Is a Signal Wrapped up in an Incentive

Markets Link the World

The Great Economic Problem

Information and Incentives

Speculation

Prediction Markets

6. Price Ceilings and Price Floors

Price Ceilings

Price Ceilings: Shortages and Quality Reduction

Price Ceilings: Lines and Search Costs

Price Ceilings: Deadweight Loss

Price Ceilings: Misallocation of Resources

Price Ceilings: Rent Controls

Rent Control in Mumbai

Price Floors: The Minimum Wage

Price Floors: Airline Fares

Why Do Governments Enact Price Controls?

Price Controls and Communism

7. Trade

The Big Ideas of Trade

Comparative Advantage

Another Look at Comparative Advantage

Comparative Advantage Homework

Tariffs and Protectionism

Arguments Against International Trade

Avengers: The Story of Globalization (Optional)

8. Externalities

An Introduction to Externalities

External Benefits

Command and Control Solutions

The Coase Theorem

Trading Pollution

A Deeper Look at Tradable Allowances

Externalities and Incentives: The Economics of COVID

9. Costs and Profit Maximization Under Competition

Introduction to the Competitive Firm

Maximizing Profit Under Competition

Maximizing Profit and the Average Cost Curve

Entry, Exit, and Supply Curves: Increasing Costs

Entry, Exit, and Supply Curves: Constant Costs

Entry, Exit, and Supply Curves: Decreasing Costs

10. Competition and the Invisible Hand

Minimization of Total Industry Costs of Production

The Balance of Industries and Creative Destruction

11. Monopoly

Maximizing Profit Under Monopoly

Office Hours: Calculating Monopoly Profit

The Monopoly Markup

The Costs and Benefits of Monopoly

12. Price Discrimination

Introduction to Price Discrimination

The Social Welfare of Price Discrimination

Tying

Bundling

13. Labor Markets

The Marginal Product of Labor

Econ Duel: Is Education Signaling or Skill Building?

Human Capital and Signaling

The Tradeoff Between Fun and Wages

Compensating Differentials

Do Unions Raise Wages?

14. Public Goods and the Tragedy of the Commons

Public Goods and Asteroid Defense

A Deeper Look at Public Goods

Club Goods

The Tragedy of the Commons

15. Asymmetric Information

Asymmetric Information and Used Cars

Asymmetric Information in Health Insurance

Moral Hazard

Solutions to Moral Hazard

Signaling

16. Consumer Choice

Introduction to Consumer Choice

Budget Constraints

Indifference Curves

Consumer Optimization

17. Bonus Topics

Office Hours: Game Theory