With oil and gas prices climbing higher and higher, there has been much discussion over what is causing the price inflation. Some have pointed out that oil companies have been able to increase the price of oil freely and thus reaped additional profits (the term being used in the discourse…

Recapping what was introduced in Part 1. A firm has a profit defined as: Where TC is total cost, and TR is total revenue. TR is defined as:

Imagine you run a firm that is going to produce and sell a single product, say a pharmaceutical drug. You aren’t sure what price to sell the drug. You start by pricing it such that you can at least cover costs. Now you fiddle with the price to see if…

I recently came across this paper about minimum wage effects. The paper presents a far more complicated model than the one I used in my previous post, but I did notice the opportunity to use some real data for the methods shown in that post. The paper presents a graph…

David Card recently won the Economics Nobel Prize (along with Joshua Angrist and Guido Imbens). His work on labor economics (with Alan Krueger) caused quite a stir in the 90s when they showed a case where the minimum wage actually increased employment. Economists freaked out because this finding supposedly showed…

I recently saw this Bloomberg article which argued against deficits. The article pointed to a set of studies involving macroeconomic models where the authors argued that deficits are effectively Ponzi schemes. There is a lot discussed in these studies, however I’m going to focus on something narrow but much more…

In my first blogpost (here) I connected some equations related to the economics of monopolies and applied them to labor markets. I ended up focusing on a value which I called the (labor) price elasticity of demand for money, and thought that it was a representative measure of Marx’s surplus…

In the traditional capitalist model, the most efficient and capable company succeeds. The above sentiment is one we’ve heard countless times before, to the point that it is taken as common sense. We are told that the free market is the most efficient way of producing and allocating resources. However…

I came across an interesting equation called the Markup Rule (see here: https://en.wikipedia.org/wiki/Markup_rule). This formula seems to be standard economic fare and relates the elasticity of a product with the possible amount of profit made. Similar formulas can be found elsewhere, but I like how things are framed here. This…