Sunday, January 30, 2011

Flash Animation

If you are looking to use interactive graphs in your teaching or learning of economics, you might be interested in this site. A thanks goes to John LeFeber of the Council for Economic Education.

Terms of Trade

I believe this document will help you instruct your students how to find the terms of trade and remove any discussion.

For years, I have labored to show students how to find the terms of trade. Given that there are an infinite number of answers, this is hard to teach especially when you have 50 economics students. I wrote this two page discussion on a whim. Let me know what you think.

Saturday, January 29, 2011

Reasons for a Change in Demand


Friday's lecture.

Teaching AP Economics

This paper discusses the costs and benefits of teaching AP Economics and concludes that we are emphasizing the wrong approach. I disagree.

Friday, January 28, 2011

Introduction to Demand

Relative Cost
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Today's lecture on demand. Negative slope. Change in demand. Law of Demand.

Monday, January 24, 2011

Today's Lecture


Comparative advantage, trading possibilities, and the output over method.

Friday, January 21, 2011

Economic Thought

Yesterday, at our first Rachel's Ch-allege meeting, we decided that we should work to welcome new students into our group. I was wondering why it's so hard to accept new students especially in a small town. I wonder if there's a Nash Equilibrium in our clicks. What I mean is adding one more person to the group would disrupt the pecking order bringing some in the group more utility and some less. Since a body tends to remain at rest unless acted upon by an outside force, I can see why so many new students are excluded.

PPF with Increasing Cost


Thursday's lecture in case you missed it.

Tuesday, January 18, 2011

Sunday, January 16, 2011

Sign of the Times


Instead of proud grandmothers pulling out their wallet out of their purse, they show pictures to their friends using a phone or a laptop.

In this cartoon, Mable can now spend countless hours maximizing her utility by showing millions of digital photos saved in clouds.  Assuming her friend, Edna, doesn't get bored, both friends now can have a fuller life--the picture perfect retirement.

Beware of the Naked Man Offering You His Shirt

Yesterday I read in the Muscatine Journal about a man who works in the private sector was appointed to serve on a public sector foundation.  This man holds the highest ethical standards.  But I was wondering if some corporations try to place their executives on public boards like Muscatine Power and Water to influence public policy in their favor.

I have read many annual reports for Fortune 500 companies who report that they are a responsible corporate citizen.  Often these reports highlight the number of volunteer hours that their employees have contributed to the community.  Many serve on boards of banks, the Community Y, and scholarship foundations.  I believe that this is strategic positioning and protects the private sector.  For example, say that I am a business who uses a lot of electrical energy.  My position on the board at the utility would be to keep rates low.

Public Choice Theory of Regulation holds that regulators will do what is in their own best interest to maximize their power and market share.  Yet, the only people who will serve on boards are those who are interested in the regulation to begin with.  This poses a dilemma that I can't solve.  It just makes me more careful about what I wish for.

Wednesday, January 12, 2011

Poaching in Kenya

The horn of the rhino is prized in Asia.  The rhino is hunted nearly to extinction in Kenya because the value of the horn is worth a half of year's wages.  The incentives to kill the rhino are great.  In South Africa, the rhino is harvested so there's an overpopulation.  When a rhino dies of natural causes, the horn is hoarded in a warehouse.  If the South Africans would sell the horn the supply of horns would increase, the price would go down, and less poaching in Kenya would result.

Would selling human organs give the same results?  Would legalizing marijuana?

Tuesday, January 11, 2011

Game Theory - Final Exam Game

Finals begin today. I am going to propose the following classic game to my Macro students. They are to choose if they want to take the test or not take the test. There are many 4.0 students in this class who will surely get an A on the exam. I will then randomly pair two students and their grade on the final will be determined by the following payoff matrix.  It is a prisoner's dilemma in which students would be better off colluding and not taking the test, but the incentives are to lucrative to deviate and take the exam.  I predict most students will opt to take the test.

The game payoff should be converted into utility so as to be an economic game.  I would wager that if I changed the C to an F everyone would opt to take the test.


This image is from my coloring workbook on microeconomics.  I have dubbed the knight, Sir Nash.  Sir Nash behaves strategically when making decisions in that he considers the actions of his rivals. In the grading game above, both players had to choose whether to take the test or not to take the test at the same time.  There are many games, like checkers, in which one must go first.  I also think that firms that are price takers do not act strategically and firms that are monopolies also do not consider the actions of rivals.

Game theory is a fascinating and complex decision-making tool.  I hope to use this blog to continue my reflection about the topic.  Right now, we have four inches of snow on the ground, and I have to decide whether to shovel my sidewalk or wait and hope my neighbor shovels it for me.  What would happen if we both wait?

Sunday, January 09, 2011

Phillips Curve


This is the down and dirty lecture on the Phillips Curve as it related to the AD/AS model. The big trick is to move the PC opposite the AS. Any change in AD moves the economy along the PC. It's that simple.

Thursday, January 06, 2011

Loanable Funds

Loanable Funds
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I have worked years perfecting this lecture on the Loanable Funds market for AP Macro. I challenge you to improve on it.

Smuggling and Game Theory

game theory Pictures, Images and Photos

This isn't mine, but I like it.

Tuesday, January 04, 2011

Game Theory at Yale

If you always wanted to take a class at Yale, here's your chance.  I'm taking Game Theory with Ben Polak.  The link is right here.  (Link should work.  Sorry about any problems.)