This week, we will use elasticities to study per-unit taxes and the behavior of a zero-cost monopolist. We will also start on the foundations of the Demand curve — consumer behavior.
- Topics: Applying Supply and Demand, Monopoly (the zero-cost part), Elasticities and Consumer Choice
- New readings: Perloff 3, 4.1-4.3
- New practice: WB 3-5
I say “new” because it's worthwhile to go back and do the readings and practice from last week if you missed them.
- (Quiz 1 stuff)
- Supply-and-demand model calculations
- Finding the equilibrium
- Evaluating price floors and ceilings
- (Earlier stuff)
- Calculating elasticities
- Interpreting elasticities and classifying goods — necessities vs luxuries, complements vs substitutes, normal vs inferior
- Applying elasticities to the (zero-cost) monopoly problem
- Applying elasticities to per-unit tax problems
New stuff on next week's quiz and midterm (anticipated)
- Graphing them
- Determining if a bundle is affordable or not
- Identifying a bundle X and Y, on the graph given expenditures on X and Y
- Finding and interpreting the slope
- Preferences — graphing them, etc.
- Solving the consumer's problem and deriving Demand from it