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8/14/18

Examples of public goods, a list of public goods

08:31 3
Examples of public goods, a list of public goods
This post was updated in August of 2018 with new information and examples.

Remember the definition of a public good is something that is non-rival, and non-excludable.

Non-rival means that if one person consumes a good, that good can still be consumed by someone else.  For example, a radio station, just because I am listening to a radio station doesn't mean that someone else can't.  An example of a rival good is an apple.  If I eat the apple, you certainly cannot eat it after I am done.

What is consumer surplus, and how to calculate it.

07:59 9
What is consumer surplus, and how to calculate it.
This post was updated in August of 2018 to include more information and new examples.

Consumer surplus is when a consumer derives more benefit (in terms of monetary value) from a good or service than the price they pay to consume it.  Technically, this is the difference between your maximum willingness to pay for an item and the market price. For example, imagine you are going to an Electronics store to buy a new flat panel TV.  Before you go to the store, you decide to yourself that you are not going to pay more than $300 for a TV.  This $300 is your maximum willingness to pay for the TV.  After entering the store, you find a TV you really like for only $100!  Since you were willing to pay $300 for the TV, and you only ended up paying $100 for it, you have saved $200.  This $200 is called consumer surplus by economists, because it is the “extra” or “surplus” value you received from the good beyond the price you paid for it.

The 7 best sites for learning economics for free

07:29 9
The 7 best sites for learning economics for free
This post was updated in August 2018 with new information and sites.

Since creating this website I have scoured the web to see which sites do a good job at teaching economics, and trying to find ways to do it better. It has been an exciting 7 years so I have finally motivated myself to visit some of these first posts to update them. Since the point of this site is to help you learn, I have gathered what I think are the 7 best websites for learning economics that are free (excluding this one). I know there will be some disagreements or new ideas so feel free to add your thoughts in the comments! It is also possible that different medium (such as youtube channels) will change the usefulness of this list because it only focuses on the website. I put them in order based on content, ease of use, and depth of topics discussed. So here it goes:

1) http://en.wikipedia.org/wiki/Economics
No surprise here, wikipedia tops our list of useful free sites to learn economics.  While they do a terrible job of going through examples and showing the application of the concepts, you can find almost anything related to economics at their site.  Another good thing about wikipedia is that the majority of their content has references, so if needed you can look directly at the source. I recommend using wikipedia as a reference if you need to find an equation or theory to justify or cite as you are going through your economics class. However, if you are math savvy I would recommend this as your go to site.

What causes shifts in the IS or LM curves?

06:35 21
What causes shifts in the IS or LM curves?
This post was updated in August 2018 to include new information and examples.

This post goes over the economics and intuition of the IS/LM model and the possible causes for shifts in the two lines. It is possible for the IS curve (Investment and Savings) and the LM curve (Liquidity preference and Money supply) to either increase or decrease based on their determinants. Because of this, it is important to remember the two formulas for IS and LM, and that any change in the variables in the equations could cause a change in the graph:

The IS equation is:

Y = C(Y-T(Y))+I(r)+G+NX(Y)

8/13/18

Self-Interest vs Social Interest, the invisible hand and resource allocation

07:52 0
Self-Interest vs Social Interest, the invisible hand and resource allocation
wikipedia
This article was updated in August of 2018 to include new information and examples.

The self-interest vs. social-interest debate began with Adam Smith over 200 years ago and is one of the primary arguments made in favor of capitalism vs. other types of economies.

Self-interest is when individuals make decisions that are in their own best interest.  Like when you decide to get up in the morning to go to work and make money, or when you pay the grocery store for food that you would like to eat.  Other examples of self interest include trying to win at sports (for example coming first in a race) or eating the food that is on your plate rather than sharing it. A final example of self interest could be picking up money on the street or using coupons to get a discount at the store--an altruistic individual (someone not acting in their own self-interest) would not take advantage of these opportunities.

8/12/18

How a change in tastes and preferences affects market price and market quantity

17:06 1
How a change in tastes and preferences affects market price and market quantity
This post was updated in August 2018 to include new information and examples.

This post asks the question of what happens in the market for a good or service when the tastes or preferences for the good or service change.  This question fits into our discussion about the determinants of demand

One of the determinants of demand is the current state of tastes and preferences for the good or service.  In this example, we will be focusing on the services for Romanian translation.  This may seem like an obscure topic, and it is to most people which will limit our demand for the service.  Because of our tastes or preferences for this specific service, we will have a low demand for it, especially compared to the demand for Spanish or Chinese translation services.  But imagine if the U.S. or Europe signed a new free trade agreement, or began spending billions of dollars in business opportunities in Romania.  This would potentially change our tastes and preferences for this service, and likely shift the demand curve right/up.

Giffen goods in economics, examples with graphs

13:44 17
Giffen goods in economics, examples with graphs
This post was updated in August of 2018 to include new information and examples.

In economics, a giffen good is an inferior good with the unique characteristic that an increase in price actually increases the quantity of the good that is demanded.  This provides the unusual result of an upward sloping demand curve.