• <b>United States Federal Reserve</b>

Intermediate Microeconomics


1. Supply and Demand


The supply-demand model is generally the starting point for any economic analysis. The supply and demand curves represent the behavior of sellers and buyers, respectively, and the model allows us to examine how interactions between buyers and sellers determine prices and quantities. The supply-demand model can easily be augmented to examine the impact of public policies, such as price controls, quantity controls, taxes and subsidies, on market outcomes. In the Screencasts/Pencasts for this topic, we develop the supply-demand model, determine market equilibrium, examine "shocks" to the equilibrium (shifts in supply and/or demand), and how government interventions affect market outcomes.


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Basics

This Screencast discusses the basic idea behind the supply-demand model, including its simple yet powerful predictive power in many market settings. [Play ScreenCast]


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Key Assumptions

This Screencast lists and discusses the key assumptions that are made in the context of the basic supply-demand model. [Play ScreenCast]


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Demand

This Screencast describes the law of demand, the difference in a movement along a given demand curve and a shift in the demand curve, and lists some key events/factors that shift demand curves. [Play ScreenCast]


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Changes in the Quantity Demanded versus Changes in Demand

This Pencast illustrates the difference between a change in quantity demanded and a change in demand. [Play Pencast]


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The Demand Function

This Pencast provides an example of an implicit and explicit form demand function and shows how to convert a demand function into an inverse demand function. [Play Pencast]


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Price and Changes in Quantity Demanded

This Pencast relies on the explicit demand function used in the previous Pencast to show how the quantity demanded of a good responds to a change in its price. [Play Pencast]


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Slope of the Demand Curve

This Pencast makes use of the inverse demand function derived in a previous Pencast to compute the slope of the demand curve. [Play Pencast]


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Income and Changes in Quantity Demanded

This Pencast shows how the quantity demanded of a good responds to a change income. Such an analysis can be used to determine if the good under consideration is a normal or inferior good. [Play Pencast]


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Prices of Related Goods and Changes in Quantity Demanded

This Pencast shows how the quantity demanded of a good responds to a change in the price of a related good. Such an analysis can be used to determine if the two goods are substitutes or complements. [Play Pencast]


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Summing Demand Curves

This Pencast illustrates how to sum individual demand curves to arrive a demand function for the market. [Play Pencast]


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Supply

This Screencast discusses the different shapes of supply curves, the difference in a movement along a given supply curve and a shift in the supply curve, and lists some key events/factors that shift supply curves. [Play ScreenCast]


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Changes in Quantity Supplied versus Changes in Supply

This Pencast illustrates the difference between a change in quantity supplied and a change in supply. [Play Pencast]


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The Supply Function

This Pencast provides an example of an implicit and explicit form supply function and shows how to convert a supply function into an inverse supply function. [Play Pencast]


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Price and Changes in Quantity Supplied

This Pencast relies on the explicit supply function used in the previous Pencast to show how the quantity supplied of a good responds to a change in its price. [Play Pencast]


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Slope of the Supply Curve

This Pencast makes use of the inverse supply function derived in a previous Pencast to compute the slope of the supply curve. [Play Pencast]


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Input Prices and Changes in Quantity Supplied

This Pencast shows how the quantity supplied of a good responds to a change in the price of an input. [Play Pencast]


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Summing Supply Curves

This Pencast illustrates how to sum individual supply curves to arrive a supply function for the market. [Play Pencast]


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Market Equilibrium

This Pencast illustrates how to compute the equilibrium price and quantity using the explicit-form supply and demand functions from previous Pencasts. [Play Pencast]


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Demand Shift

This Pencast shows how to compute the new equilibrium price and quantity after a change in income. [Play Pencast]


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Allowing the Equilibrium Price and Quantity to Vary with Income

This Pencast shows how to allow the equilibrium price and quantity of a good to vary with income. Ultimately, one arrives at the same conclusion reached in the previous pencast. The only difference is that the approach used in this Pencast uses calculus, and the one in the previous Pencast solves for the new equilibrium using the new income. [Play Pencast]


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Supply Shift

This Pencast shows how to compute the new equilibrium price and quantity after a change in the price of an input. [Play Pencast]


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Allowing the Equilibrium Price and Quantity to Vary with Input Prices

This Pencast shows how to allow the equilibrium price and quantity of a good to vary with the price of an input. Ultimately, one arrives at the same conclusion reached in the previous pencast. The only difference is that the approach used in the Pencast uses calculus, and the one in the previous Pencast resolves for the new equilibrium using the new price of the input. [Play Pencast]


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Simultaneous Shifts in Supply and Demand

This Pencast shows to compute the new equilibrium price and quantity after a simultaneous increase in income and the price of an input. [Play Pencast]


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Price Elasticity of Demand

This Pencast shows how to compute the price elasticity of demand. In addition, intuition on what the price elasticity of demand indicates is provided. [Play Pencast]


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Elasticity Along a Linear Demand Curve

This Pencast shows that the price elasticity of demand varies along a linear, downward-sloping demand curve. [Play Pencast]


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Constant Elasticity Demand Curves

This Pencast shows that the price elasticity is constant when the demand curve is vertical or horizontal. In addition, we demonstrate that an exponetial demand function also has a constant price elasticity of demand. [Play Pencast]


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Other Demand Elasticities

This Pencast shows how to derive the income and cross-price elasticities of demand as well as providing examples of each. [Play Pencast]


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Price Elasticity of Supply

This Pencast shows how to compute the price elasticity of supply. In addition, intuition on what the price elasticity of supply indicates is provided. [Play Pencast]


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Elasticity Along a Linear Supply Curve

This Pencast shows that the price elasticity of supply varies along a linear, upward-sloping supply curve. [Play Pencast]


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Constant Elasticity Supply Curves

This Pencast shows that the price elasticity is constant when the supply curve is vertical or horizontal. In addition, we demonstrate that an exponetial supply function also has a constant price elasticity of supply. [Play Pencast]


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Price Ceiling

This Pencast imposes a binding price ceiling using the demand and supply functions from previous Pencasts. The effects of the price ceiling are shown mathematically and graphically. [Play Pencast]


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Price Floor

This Pencast imposes a binding price floor using the demand and supply functions from previous Pencasts. The effects of the price floor are shown mathematically and graphically. [Play Pencast]


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Ban on Foreign Imports

This Pencast illustrates how a ban on foreign imports affects market supply and the impact that such an intervention has on the market equilibrium. [Play Pencast]


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Quota on Foreign Imports

This Pencast illustrates how a quota imposed on foreign imports affects market supply and the impact that such an intervention has on the market equilibrium. [Play Pencast]


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Per-Unit Tax Collected from Sellers

This Pencast illustrates how a per-unit tax collected from sellers affects the market equilibrium. [Play Pencast]


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Per-Unit Tax Collected from Buyers

This Pencast illustrates how a per-unit tax collected from buyers affects the market equilibrium. [Play Pencast]


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Per-Unit Tax that Maximizes Tax Revenue: Part I

This Pencast discusses and illustrates the Laffer Curve, and shows the first step that is necessary for determining the per-unit tax that maximizes the tax revenue to be received by the government. The equations derived in this Pencast are used in the following Pencast [Play Pencast]


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Per-Unit Tax that Maximizes Tax Revenue: Part II

This Pencast shows how to determine the per-unit tax that maximizes the tax revenue to be received by the government. The computation relies on information provided in the previous Pencast. [Play Pencast]


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Per-Unit Subsidy Paid to Sellers

This Pencast demonstrates how a per-unit subsidy paid to sellers affects the market equilibrium. [Play Pencast]


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Per-Unit Subsidy Paid to Buyers

This Pencast demonstrates how a per-unit subsidy paid to buyers affects the market equilibrium. [Play Pencast]


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Tax Incidence and Elasticity

This Pencast shows that tax incidence, i.e. how a tax is distributed between buyers and sellers, depends specifically on the relative elasticities of supply and demand. [Play Pencast]


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