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8.
Effects of Elasticity on the Responsiveness of Revenue to Price Changes Along Linear Demand Functions
The student is expected to understand the following aspects of the relationship between elasticity and revenue, given price changes on a linear demand schedule:
revenue changes in response to price changes depend upon elasticity;
elasticity changes along a linear demand function ;
when elasticity is greater than one (elastic), price changes and revenue changes are inverse;
when elasticity is less than one (inelastic), price changes and revenue changes are direct;
the slope and intercept on a linear demand function affect elasticity at a given level of quantity demanded [Details...]


9.
Model of Consumer Behavior: Constrained Optimization
The purpose of this Module on Consumer Behavior is to explain income constrained utility maximization. A graphical solution to the optimization process is offered to illustrate the consumers selection of consumption quantities of two available goods given a budget constraint during a fixed time period. The income constrained utility maximizing quantities of the goods are gotten assuming prices and income are predetermined and consumption is subject to satiation.
Students are expected to understand graphical depictions of pivotal aspects of the optimization process:
indifference curves;
the income constraint and;
the optimization condition using the slopes of the curve and constraint.
[Details...]


10.
Model of Consumer Behavior: Law of Demand
Consumer behavior using Income constrained utility maximization provides a specification for the consumers objective function. The resulting quantities of two available goods that are selected using this algorithm maximize satisfaction given income. Using this model of consumer behavior shows that the resulting maximizing quantities of a good that correspond to different prices are those that demonstrate the inverse relationship between price and quantity demanded.
Studens are expected to understand the following aspects of the graphical depiction of the law of demand using income constrained utility maximization:
the effect of changing a product price on the income restraint;
the consequences of changes in the product prices on the utility maximizing quantity of the product;
how to derive the Law of Demand using a set of product prices and the model of consumer behavior (income constrained utility maximization).
[Details...]


11.
Elasticity
Elasticity is a measure of responsiveness. It tells how much one thing changes when you change something else that affects it.
For example, the elasticity of demand tells us how much the quantity demanded changes when the price changes. The elasticity of demand measures the responsiveness of quantity demanded to changes in the price charged.
The following discussion mostly uses the elasticity of demand for its examples. The elasticity concept can be used for other things, too, like supply or income.
[Details...]


12.
Elasticity  A Quantitative Approach
The first elasticity tutorial took a qualitative approach to elasticity. The idea conveyed was
Elasticity = Responsiveness
The elasticity of Q with respect to P is the responsiveness of Q to changes in P.
Elasticity has a quantitative meaning, a specific way of measuring responsiveness.
Suppose P changes, and Q changes as a result.
The elasticity of Q with respect to P is the relative change in Q divided by the corresponding relative change in P.
[Details...]




15.
Utility, Substitution and Demand
This short interactive essay explains how demand curves and maximization of expected utility are related by deriving a demand curve from assumptions about an individual's utility. [Details...]


16.
Economics General  Markets
Listing of topics on demand, supply, prices, and markets, with available resources ranging from tutorials, articles, and case studies, to worksheets and sample problems. [Details...]


17.
Consumption
The consumption function explains how consumption expenditures depend upon the level of income. A linear specification of the consumption function is demonstrated here and, there are two parameters that may be selected to examine how the function is affected. [Details...]


18.
Edgeworth Box application
An interactive application that allows the user to enter and change the parameters used in an Edgeworth box display. Note that this application requires Java to be installed on your computer. [Details...]


19.
Credibility of Economic Policy
This Learning Module will introduce you to the issue of economic policy credibility. Using a simple formal model, you can see how differences in public beliefs can cause the same policy action to produce different outcomes. For an analytical framework to evaluate public beliefs, examine six concepts relating to the credibility of economic policy. For real world experience, there are case summaries for you to consider. [Details...]






24.
Random Sequences
Game theory presents the concept of mixed strategies as a method to determine random action choices. This applet tests whether usersubmitted sequences are random. [Details...]


25.
Game Theory Simulation
Here is a little online Javascript utility for game theory (up to five strategies for the row and column player). It is also designed to play against you (using the optimal mixed strategy most of the time...)
Notes:
This will only work on Netscape or Internet Explorer, version 3 or later.
You need only enter the nonzero payoffs. The software will set the others to zero.
To play against the computer, enter the payoffs, press "Play" and click on row strategies. (The computer does not know your move...)
[Details...]




28.
Prisoner's Dilemma: a spatial variation
The spatial variant of the iterated prisoner's dilemma is a simple yet powerful model for the problem of cooperation versus conflict in groups. The applet here demonstrates the spread of 'altruism' and 'exploitation for personal gain' in an interacting population of individuals learning from each other by experience. [Details...]





32.
Completing Markets: Options and LongLived Securities
Options are one of the more interesting securities to which arbitrage reasoning can be applied. (European) options, recall, are assets who derive their value from an underlying security, thus they have a return structure ro = [max(0, r1  c), max(0, r2  c), .., max(0, rSc)] where r1, r2, .., rS are the returns on the underlying security and c is the "strike" price. The strike price is the asset price at which the owner of the option is entitled to buy (if a call option) or sell (if a put option) a unit of an underlying security if he decides to "exercise" it. One of the more interesting results, as stressed by Stephen Ross (1976), is that we can use options to "complete" incomplete markets: specifically, we can construct options to span a space when there are an insufficient number of fundamental assets. [Details...]




35.
Risk Aversion
The interactive tutorial on risk calculated the expected values of some games and securities. It made a connection between the expected value of a security and its market price. This use of the expected value is based on the Law of Large Numbers, which is a statement about what happens when a game is repeated over and over and over again. If a game can be repeated many times, good luck and bad luck tend to wash out.
[Details...]



37.
Trade Equilibrium
The onecountry international trade equilibrium model includes community indifference curves (denoted CIC, suggested to show demand) to reveal preferences in consumption and production possibilities frontiers (PPF) with increasing opportunity costs in production.
[Details...]


38.
Exchange Rate Model
The Exchange Rate Model is a descriptive graphical model of international exchange markets. The objective is to explain the slope of the supply function of foreign exchange. One expects supply functions to be upward sloping and this demonstration explains how events in the product market lead to this result.
[Details...]



40.
Market Shocks
An interactive discussion on the market adjustment process in the presence of demand and supply shocks. [Details...]







46.
The Story of Money
A tutorial with many pictures of money in its various forms over time. Sections include: Barter; Common products as money; Value in use, value in exchange; Money simplifies trade; Money takes many shapes; Early coins; Paper money; Banking evolves; Commerce in the colonies; Early American money; After the Revolution; U.S. banks and money; The Civil War era; Progress and problems; The Fed and afterwards; Price stability: Goal of the Fed
[Details...]


47.
American Currency Exhibit
This tutorial contains many images of American currency, going as far back as 1776. Eras represented by these images include: Independence; Westward Expansion; Civil War; Industrial Revolution; Metal Standards; National Stability; and World Standard. [Details...]


48.
Simple Macro Model
The parameters here provide a large number of possible solutions to the model and demonstrate important aspects of the macro theory. Select a set of parameters for the baseline and, then change some of the assumptions to examine the impacts of an alternative scenario. [Details...]


49.
MacroEquilibrium
Equilibrium in the goods market may be graphically depicted using a simple macromodel of the relationship between income(Y) and aggregate expenditure(AE), where AE appears on the vertical axis and Y is on the horizontal axis. Equilibrium is depicted as the point where aggregate expenditues (AE) equal income (Y) or, where the AE function crosses the 45degree line. [Details...]


50.
Money Market
The equilibrium in the money market reflects the simultaneous interaction of the supply of and, the demand for, money. In this model, the supply of money is set by the FED and, the demand for money comprises both the speculative and transactions demand for money. [Details...]


51.
ISLM Model
The ISLM model depicts the causes and consequences of simultaneous equilibria within the product market and the money market. A graphical system visually demonstrates how an equilibrium level of income established in the product market interacts with the equilibrium rate of interest determined in the money market. [Details...]


52.
Arbitrage Model
The direction of trade is crucial in currency arbitrage. Use this page to enter some exchange rates below and see a graph of the TPF for the dollar and the pound with arbitrage profit as demonstrated from the slopes of the TPF.
[Details...]


53.
Tutoial on Equilibrium analysis
In many aspects of economic analysis, we tend to assume that a condition of equilibrium exists with respect to key economic variables. Common examples include different models of market behavior known as Supply and Demand analysis. This tutorial helps to illuminate different concepts associated with the equilibrium analysis. [Details...]


54.
Supply and demand Overview
Students are expected to gain an appreciation of the interaction of supply and demand. The behavior of producers is reflected in the upward sloping supply function and, consumer behavior is depicted with the downward sloping demand curve. A set of parameters may be used to specify shifts in these functions and, their impacts lead to different market outcomes.
The following list enumerates several specific subsidiary goals of this section:
determination of equilibrium price and quantity;
factors that shift the curves and;
the consequences of changes in supply and demand on equilibrium price and quantity.
[Details...]




57.
SimpleGraph
SimpleGraph is a configureable applet that shows the graph of a function and, optionally, marks a point on the graph. If there is a point, then the user can control its xcoordinate either by adjusting a slider at the bottom of the applet or by entering the xcoordinate in an input box. [Details...]


58.
EpsilonDelta
This applet is designed to help users understand the epsilon/delta definition of a limit. The question is whether the limit as x approaches a of a function, f(x), is limit to L. [Details...]






63.
Java component for mathematics: Evaluator
The Evaluator applet lets the user enter values for one or more variables, and it displays the values of one or more expressions that depend on those variables. The display is updated continuously. If no applet params are specified, then there is one variable, named "x", and one expression, "log2(x)". [Details...]


64.
Java component for mathematics: Simple Graph
SimpleGraph is a configureable applet that shows the graph of a function and, optionally, marks a point on the graph. If there is a point, then the user can control its xcoordinate either by adjusting a slider at the bottom of the applet or by entering the xcoordinate in an input box. [Details...]



66.
Java components for Mathematics: Animated graph
The MutliGraph applet can show the graphs of several functions. The functions can, optionally, depend on parameters that are controlled by sliders at the bottom of the applet. (This is similar to the FamiliesOfGraphs applet, except that it can handle more than one function and it is possible to have no parameters at all.) The default is to have a single function input and no parameters. [Details...]


67.
Lemonade Stand
This applet allows you to control all aspects of your Lemonade Stand, from pricing, to quality control, to purchasing your necessary inventory, all while dealing with unpredictable weather, picky customers, and inventory wastes.
[Details...]



69.
Average Cost
This tutorial discusses average cost, gives some typical uses of the average cost concept, and shows the distinction between average cost and marginal cost. [Details...]


70.
Cost Concepts
This tutorial introduces economics concepts of total cost, fixed cost, variable cost, and marginal cost. [Details...]







76.
Cost Concepts
This tutorial introduces economics concepts of total cost, fixed cost, variable cost, and marginal cost.
Firms use these cost concepts for pricing and output decisions. These concepts form the basis for much of cost accounting.
[Details...]





80.
Cost Functions
Click on Lesson 2. This site explains Average fixed costs and average variable costs through graphical illustrations and movies showing the transformations.This tutorial is designed to teach about a very important part of Principles of Microeconomics, the cost functions! These functions are designed to help students understand the costs of production from different perspectives:; cost per unit versus total cost; explicit vs. implicit cost; deriving fixed, variable and total cost per unit; deriving average fixed, average variable and average total cost per unit; understanding and creating graphs for all the cost curves.
[Details...]



82.
Cost Function
Click on a point on the total cost function to see more about how to visualize and quantify unit costs (AC and MC) from the total cost function. [Details...]


83.
Comparative Advantage
The linear production possibilities frontier is shown to be a restraint/constraint and, it explains scarcity and quantitatively defines opportunity cost. The model assumes there are two goods, a fixed resource endowment and a known level of technological expertise in production. [Details...]


84.
Economic Policy Tools
Interactive tutorial on Economic Policy: To achieve the economic goals of low unemployment and stable prices, the Congress and the President can use two fiscal policy instruments, government spending and taxation to affect real GDP and the price level. In addition, the Federal Reserve can use three monetary policy instruments, open market operations and changes in the discount rate and required reserve ratio to change real GDP and the price level. [Details...]


85.
National Budget Simulation
This simple simulation should give you a better feel of the tradeoffs which policy makers need to make in creating federal budgets and dealing with deficits. This simulation asks you to adjust spending and tax expenditures in the the 2004 budget proposed by the White House in order to achieve either a balanced budget or any other target deficit. [Details...]

