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Introduction to Markets

Textbook Chapter: Chapter 4

MobLab Game: Private Value Sealed Bid auction

Key Teaching Points:

  • Learn how a basic exchange happens by participating in an auction.
  • Gains from trade (i.e., consumer surplus).
  • Price discovery: the transaction price results from the bids of other buyers.

Supply and Demand in a Competitive Market

Textbook Chapter: Chapters 4 & 5

MobLab Game: Competitive Market

Key Teaching Points:

  • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
  • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
  • Gains from trade (i.e., consumer and producer surplus).
  • Shifts in either supply or demand change equilibrium outcomes.

Government Interventions in Competitive Markets

Textbook Chapter: Chapters 7 & 8

MobLab Game: Competitive Market

Key Teaching Points:

  • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
  • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
  • The difference between tax incidence and who pays the tax.
  • Relative elasticities determine incidence of a tax or subsidy.
  • Excess supply (price floors) and excess demand (price ceilings).
  • The efficiency implications of government interventions.

Externalities

Textbook Chapter: Chapter 10

MobLab Game: Judge Me Not

Key Teaching Points:

  • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

Public Goods

Textbook Chapter: Chapter 11

MobLab Game: Discrete (Threshold) Public Goods

Key Teaching Points:

  • Highlights the features of public goods: non-rival and non-excludable.
  • Demonstrates the distinction between private and social benefits of public goods.
  • Shows how individual profit maximization leads to the free-rider problem.

Monopoly Pricing

Textbook Chapter: Chapter 15

MobLab Game: Cournot (with Group Size=1)

Key Teaching Points:

  • Monopolies restrict output in order to increase price.
  • The tension between the quantity price effects of increased output.

Game Theory

Textbook Chapter: Chapter 17

MobLab Game: Prisoner’s Dilemma

Key Teaching Points:

  • Key features of games: payoff matrices, best responses and dominant strategies.
  • Identification of the Nash equilibrium.
  • The (sometimes) conflicting incentives of cooperation and self-interest.
  • Repeated play may lead to more cooperative outcomes.

Oligopoly

Textbook Chapter: Chapter 17

MobLab Game: Cournot29

MobLab Game: Bank Runlings).

  • The efficiency implications of government interventions.
  • Externalities

    Textbook Chapter: Chapter 10

    MobLab Game: Judge Me Not

    Key Teaching Points:

    • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

    Public Goods

    Textbook Chapter: Chapter 11

    MobLab Game: Discrete (Threshold) Public Goods

    Key Teaching Points:

    • Highlights the features of public goods: non-rival and non-excludable.
    • Demonstrates the distinction between private and social benefits of public goods.
    • Shows how individual profit maximization leads to the free-rider problem.

    Monopoly Pricing

    Textbook Chapter: Chapter 15

    MobLab Game: Cournot (with Group Size=1)

    Key Teaching Points:

    • Monopolies restrict output in order to increase priceive Market

      Textbook Chapter: Chapters 4 & 5

      MobLab Game: Competitive Market

      Key Teaching Points:

      • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
      • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
      • Gains from trade (i.e., consumer and producer surplus).
      • Shifts in either supply or demand change equilibrium outcomes.

      Government Interventions in Competitive Markets

      Textbook Chapter: Chapters 7 & 8

      MobLab Game: Competitive Market

      Key Teaching Points:

      • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
      • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
      • The difference between tax incidence and who pays the tax.
      • Relative elasticities determine incidence of a tax or subsidy.
      • Excess supply (price floors) and excess demand (price ceiive Market

        Textbook Chapter: Chapters 4 & 5

        MobLab Game: Competitive Market

        Key Teaching Points:

        • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
        • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
        • Gains from trade (i.e., consumer and producer surplus).
        • Shifts in either supply or demand change equilibrium outcomes.

        Government Interventions in Competitive Markets

        Textbook Chapter: Chapters 7 & 8

        MobLab Game: Competitive Market

        Key Teaching Points:

        • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
        • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
        • The difference between tax incidence and who pays the tax.
        • Relative elasticities determine incidence of a tax or subsidy.
        • Excess supply (price floors) and excess demand (price ceilings).
        • The efficiency implications of government interventions.

        Externalities

        Textbook Chapter: Chapter 10

        MobLab Game: Judge Me Not

        Key Teaching Points:

        • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

        Public Goods

        Textbook Chapter: Chapter 11

        MobLab Game: Discrete (Threshold) Public Goods

        Key Teaching Points:

        • Highlights the features of public goods: non-rival and non-excludable.
        • Demonstrates the distinction between private and social benefits of public goods.
        • Shows how individual profit maximization leads to the free-rider problem.

        Monopoly Pricing

        Textbook Chapter: Chapter 15

        MobLab Game: Cournot (with Group Size=1)

        Key Teaching Points:

        • Monopolies restrict output in order to increase price.
        • The tension between the quantity price effects of increased output.

        Game Theory

        Textbook Chapter: Chapter 17

        MobLab Game: Prisoner’s Dilemma

        Key Teaching Points:

        • Key features of games: payoff matrices, best responses and dominant strategies.
        • Identification of the Nash equilibrium.
        • The (sometimes) conflicting incentives of cooperation and self-interest.
        • Repeated play may lead to more cooperative outcomes.

        Oligopoly

        Textbook Chapter: Chapter 17

        MobLab Game: Cournot

        Key Teaching Points:

        • The underlying logic of the Cournot model: how market price is determined by aggregate output.
        • The equilibrium outcomes of Cournot competition.
        • Repeat interaction may lead to collusive behavior.

        Labor Markets

        Textbook Chapter: Chapter 18

        MobLab Game: Simple Labor Market

        Key Teaching Points:

        • When a perfectly competitive market determines wages, the equilibrium wage (per unit of labor) is equal to the value of the marginal product of labor of the last worker hired.

        Asymmetric Information (Adverse Selection)

        Textbook Chapter: Chapter 22

        MobLab Game: Market for Lemons

        Key Teaching Points:

        • Experience in a market with asymmetric information.
        • Asymmetric information may lead to adverse selection and market failure.

        Asset Valuation

        Textbook Chapter: Chapter 27

        MobLab Game: Bubbles and Crashes

        Key Teaching Points:

        • Highlights the determinants of an asset’s value: income generated and resale value.
        • Shows how asset bubbles may develop even with complete information.

        Money & Banking

        Textbook Chapter: Chapter 29

        MobLab Game: Bank Run

        Key Teaching Points:

        • Highlights the underlying concept of fractional banking.
        • Demonstrates the trade-off between profit and risk and shows how bank runs may arise.
        • Policy interventions, such as deposit insurance, can reduce the possibility of bank runs.

        International Trade

        Textbook Chapter: Chapters 31 & 32

        MobLab Game: Comparative Advantagee: Competitive Market

        Key Teaching Points:

        • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
        • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
        • The difference between tax incidence and who pays the tax.
        • Relative elasticities determine incidence of a tax or subsidy.
        • Excess supply (price floors) and excess demand (price ceilings).
        • The efficiency implications of government interventions.

        Externalities

        Textbook Chapter: Chapter 10

        MobLab Game: Judge Me Not

        Key Teaching Points:

        • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

        Public Goods

        Textbook Chapter: Chapter 11

        MobLab Game: Discrete (Threshold) Public Goods

        Key Teaching Points:

        • Highlights the features of public goods: non-rival and non-excludable.
        • Demonstrates the distinction between private and social benefits of public goods.
        • Shows how individual profit maximization leads to the free-rider problem.

        Monopoly Pricing

        e: Competitive Market

        Key Teaching Points:

        • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
        • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
        • The difference between tax incidence and who pays the tax.
        • Relative elasticities determine incidence of a tax or subsidy.
        • Excess supply (price floors) and excess demand (price ceilings).
        • The efficiency implications of government interventions.

        Externalities

        Textbook Chapter: Chapter 10

        MobLab Game: Judge Me Not

        Key Teaching Points:

        • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

        Public Goods

        Textbook Chapter: Chapter 11

        MobLab Game: Discrete (Threshold) Public Goods

        Key Teaching Points:

        • Highlights the features of public goods: non-rival and non-excludable.
        • Demonstrates the distinction between private and social benefits of public goods.
        • Shows how individual profit maximization leads to the free-rider problem.

        Monopoly Pricing

        Textbook Chapter: Chapter 15

        MobLab Game: Cournot (with Group Size=1)

        Key Teaching Points:

        • Monopolies restrict output in order to increase price.
        • The tension between the quantity price effects of increased output.

        Game Theory

        Textbook Chapter: Chapter 17

        MobLab Game: Prisoner’s Dilemma

        Key Teaching Points:

        • Key features of games: payoff matrices, best responses and dominant strategies.
        • Identification of the Nash equilibrium.
        • The (sometimes) conflicting incentives of cooperation and self-interest.
        • Repeated play may lead to more cooperative outcomes.

        Oligopoly

        Textbook Chapter: Chapter 17

        MobLab Game: Cournot

        Key Teaching Points:

        • The underlying logic of the Cournot model: how market price is determined by aggregate output.
        • The equilibrium outcomes of Cournot competition.
        • Repeat interaction may lead to collusive behavior.

        Labor Markets

        Textbook Chapter: Chapter 18

        MobLab Game: Simple Labor Market

        Key Teaching Points:

        • When a perfectly competitive market determines wages, the equilibrium wage (per unit of labor) is equal to the value of the marginal product of labor of the last worker hired.

        Asymmetric Information (Adverse Selection)

        Textbook Chapter: Chapter 22

        MobLab Game: Market for Lemons

        Key Teaching Points:

        • Experience in a market with asymmetric information.
        • Asymmetric information may lead to adverse selection and market failure.

        Asset Valuation

        Textbook Chapter: Chapter 27

        MobLab Game: Bubbles and Crashes

        Key Teaching Points:

        • Highlights the determinants of an asset’s value: income generated and resale value.
        • Shows how asset bubbles may develop even with complete information.

        Money & Banking

        Textbook Chapter: Chapter 29

        MobLab Game: Bank Run

        Key Teaching Points:

        • Highlights the underlying concept of fractional banking.
        • Demonstrates the trade-off between profit and risk and shows how bank runs may arise.
        • Policy interventions, such as deposit insurance, can reduce the possibility of bank runs.

        International Trade

        Textbook Chapter: Chapters 31 & 32

        MobLab Game: Comparative Advantage

        Introduction to Markets

        Textbook Chapter: Chapter 4

        MobLab Game: Private Value Sealed Bid auction

        Key Teaching Points:

        • Learn how a basic exchange happens by participating in an auction.
        • Gains from trade (i.e., consumer surplus).
        • Price discovery: the transaction price results from the bids of other buyers.

        Supply and Demand in a Competitive Market

        Textbook Chapter: Chapters 4 & 5

        MobLab Game: Competitive Market

        Key Teaching Points:

        • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
        • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
        • Gains from trade (i.e., consumer and producer surplus).
        • Shifts in either supply or demand change equilibrium outcomes.

        Government Interventions in Competitive Markets

        Textbook Chapter: Chapters 7 & 8

        MobLab Game: Competitive Market

        Key Teaching Points:

        • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
        • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
        • The difference between tax incidence and who pays the tax.
        • Relative elasticities determine incidence of a tax or subsidy.
        • Excess supply (price floors) and excess demand (price ceilings).
        • The efficiency implications of government interventions.

        Externalities

        Textbook Chapter: Chapter 10

        MobLab Game: Judge Me Not

        Key Teaching Points:

        • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

        Public Goods

        Textbook Chapter: Chapter 11

        MobLab Game: Discrete (Threshold) Public Goods

        Key Teaching Points:

        • Highlights the features of public goods: non-rival and non-excludable.
        • Demonstrates the distinction between private and social benefits of public goods.
        • Shows how individual profit maximization leads to the free-rider problem.

        Monopoly Pricing

        Textbook Chapter: Chapter 15

        MobLab Game: Cournot (with Group Size=1)

        Key Teaching Points:

        • Monopolies restrict output in order to increase price.
        • The tension between the quantity price effects of increased out

          Introduction to Markets

          Textbook Chapter: Chapter 4

          MobLab Game: Private Value Sealed Bid auction

          Key Teaching Points:

          • Learn how a basic exchange happens by participating in an auction.
          • Gains from trade (i.e., consumer surplus).
          • Price discovery: the transaction price results from the bids of other buyers.

          Supply and Demand in a Competitive Market

          Textbook Chapter: Chapters 4 & 5

          MobLab Game: Competitive Market

          Key Teaching Points:

          • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
          • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
          • Gains from trade (i.e., consumer and producer surplus).
          • Shifts in either supply or demand change equilibrium outcomes.

          Government Interventions in Competitive Markets

          Textbook Chapter: Chapters 7 & 8

          MobLab Game: Competitive Market

          Key Teaching Points:

          • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
          • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
          • The difference between tax incidence and who pays the tax.
          • Relative elasticities determine incidence of a tax or subsidy.
          • Excess supply (price floors) and excess demand (price ceilings).
          • The efficiency implications of government interventions.

          Externalities

          Textbook Chapter: Chapter 10

          MobLab Game: Judge Me Not

          Key Teaching Points:

          • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

          Public Goods

          Textbook Chapter: Chapter 11

          MobLab Game: Discrete (Threshold) Public Goods

          Key Teaching Points:

          • Highlights the features of public goods: non-rival and non-excludable.
          • Demonstrates the distinction between private and social benefits of public goods.
          • Shows how individual profit maximization leads to the free-rider problem.

          Monopoly Pricing

          Textbook Chapter: Chapter 15

          MobLab Game: Cournot (with Group Size=1)

          Key Teaching Points:

          • Monopolies restrict output in order to increase price.
          • The tension between the quantity price effects of increased output.

          Game Theory

          Textbook Chapter: Chapter 17

          MobLab Game: Prisoner’s Dilemma

          Key Teaching Points:

          • Key features of games: payoff matrices, best responses and dominant strategies.
          • Identification of the Nash equilibrium.
          • The (sometimes) conflicting incentives of cooperation and self-interest.
          • Repeated play may lead to more cooperative outcomes.

          Oligopoly

          Textbook Chapter: Chapter 17

          MobLab Game: Cournot

          Key Teaching Points:

          • The underlying logic of the Cournot model: how market price is determined by aggregate output.
          • The equilibrium outcomes of Cournot competition.
          • Repeat interaction may lead to collusive behavior.

          Labor Markets

          Textbook Chapter: Chapter 18

          MobLab Game: Simple Labor Market>MobLab Game: Cournot

          Key Teaching Points:

          • The underlying logic of the Cournot model: how market price is determined by aggregate output.
          • The equilibrium outcomes of Cournot competition.
          • Repeat interaction may lead to collusive behavior.

          Labor Markets

          Textbook Chapter: Chapter 18

          MobLab Game: Simple Labor Marketbles may develop even with complete information.

        Money & Banking

        Textbook Chapter: Chapter 29

        MobLab Game: Bank Run

        Introduction to Markets

        Textbook Chapter: Chapter 4

        MobLab Game: Private Value Sealed Bid auction

        Key Teaching Points:

        • Learn how a basic exchange happens by participating in an auction.
        • Gains from trade (i.e., consumer surplus).
        • Price discovery: the transaction price results from the bids of other buyers.

        Supply and Demand in a Competitive Market

        Textbook Chapter: Chapters 4 & 5

        MobLab Game: Competitive Market

        Key Teaching Points:

        • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
        • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
        • Gains from trade (i.e., consumer and producer surplus).
        • Shifts in either supply or demand change equilibrium outcomes.

        Government Interventions in Competitive Markets

        Textbook Chapter: Chapters 7 & 8

        MobLab Game: Competitive Market

        Key Teaching Points:

        • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
        • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
        • The difference between tax incidence and who pays the tax.
        • Relative elasticities determine incidence of a tax or subsidy.
        • Excess supply (price floors) and excess demand (price ceilings).
        • The efficiency implications of government interventions.

        Externalities

        Textbook Chapter: Chapter 10

        MobLab Game: Judge Me Not

        Key Teaching Points:

        • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

        Public Goods

        Textbook Chapter: Chapter 11

        MobLab Game: Discrete (Threshold) Public Goods

        Key Teaching Points:

        • Highlights the features of public goods: non-rival and non-excludable.
        • Demonstrates the distinction between private and social benefits of public goods.
        • Shows how individual profit maximization leads to the free-rider problem.

        Monopoly Pricing

        Textbook Chapter: Chapter 15

        MobLab Game: Cournot (with Group Size=1)

        Key Teaching Points:

        • Monopolies restrict output in order to increase price.
        • The tension between the quantity price effects of increased output.

        Game Theory

        Textbook Chapter: Chapter 17

        MobLab Game: Prisoner’s Dilemma

        Key Teaching Points:

        • Key features of games: payoff matrices, best responses and dominant strategies.
        • Identification of the Nash equilibrium.
        • The (sometimes) conflicting incentives of cooperation and self-interest.
        • Repeated play may lead to more cooperative outcomes.

        Oligopoly

        Textbook Chapter: Chapter 17

        MobLab Game: Cournot

        Key Teaching Points:

        • The underlying logic of the Cournot model: how market price is determined by aggregate output.
        • The equilibrium outcomes of Cournot competition.
        • Repeat interaction may lead to collusive behavior.

        Labor Markets

        Textbook Chapter: Chapter 18

        MobLab Game: Simple Labor Market

        Key Teaching Points:

        • When a perfectly competitive market determines wages, the equilibrium wage (per unit of labor) is equal to the value of the marginal product of labor of the last worker hired.

        Asymmetric Information (Adverse Selection)

        Textbook Chapter: Chapter 22

        MobLab Game: Market for Lemons

        Key Teaching Points:

        • Experience in a market with asymmetric information.
        • Asymmetric information may lead to adverse selection and market failure.

        Asset Valuation

        Textbook Chapter: Chapter 27

        MobLab Game: Bubbles and Crashes

        Key Teaching Points:

        • Highlights the determinants of an asset’s value: income generated and resale value.
        • Shows how asset bubbles may develop even with complete information.

        Money & Banking

        Textbook Chapter: Chapter 29

        MobLab Game: Bank Run

        Key Teaching Points:

        • Highlights the underlying concept of fractional banking.
        • Demonstrates the trade-off between profit and risk and shows how bank runs may arise.
        • Policy interventions, such as deposit insurance, can reduce the possibility of bank runs.

        International Trade

        Textbook Chapter: Chapters 31 & 32

        MobLab Game: Comparative Advantageice results from the valuations of different buyers and costs of different sellers.

      • Gains from trade (i.e., consumer and producer surplus).
      • Shifts in either supply or demand change equilibrium outcomes.

      Government Interventions in Competitive Markets

      Textbook Chapter: Chapters 7 & 8

      MobLab Game: Competitive Market

      Key Teaching Points:

      • Government interventions (per-unit taxes, subsidies, price ceilings and floors) alter equilibrium outcomes.
      • Equilibrium outcomes do not depend on whether buyers or sellers pay the tax.
      • The difference between tax incidence and who pays the tax.
      • Relative elasticities determine incidence of a tax or subsidy.
      • Excess supply (price floors) and excess demand (price ceilings).
      • The efficiency implications of government interventions.

      Externalities

      Textbook Chapter: Chapter 10

      MobLab Game: Judge Me Not

      Key Teaching Points:

      • When firms do not internalize external costs, profit maximization leads to inefficiently high levels of pollution.

      Public Goods

      Textbook Chapter: Chapter 11

      MobLab Game: Discrete (Threshold) Public Goods

      Key Teaching Points:

      • Highlights the features of public goods: non-rival and non-excludable.
      • Demonstrates the distinction between private and social benefits of public goods.
      • Shows how individual profit maximization leads to the free-rider problem.

      Monopoly Pricing

      Textbook Chapter: Chapter 15

      MobLab Game: Cournot (with Group Size=1)

      Key Teaching Points:

      • Monopolies restrict output in order to increase price.
      • The tension between the quantity price effects of increased output.

      Game Theory

      Textbook Chapter: Chapter 17

      MobLab Game: Prisoner’s Dilemma

      Key Teaching Points:

      • Key features of games: payoff matrices, best responses and dominant strategies.
      • Identification of the Nash equilibrium.
      • The (sometimes) conflicting incentives of cooperation and self-interest.
      • Repeated play may lead to more cooperative outcomes.

      Oligopoly

      Textbook Chapter: Chapter 17

      MobLab Game: Cournot

      Key Teaching Points:

      • The underlying logic of the Cournot model: how market price is determined by aggregate output.
      • The equilibrium outcomes of Cournot competition.
      • Repeat interaction may lead to collusive behavior.

      Labor Markets

      Textbook Chapter: Chapter 18

      MobLab Game: Simple Labor Market

      Key Teaching Points:

      • When a perfectly competitive market determines wages, the equilibrium wage (per unit of labor) is equal to the value of the marginal product of labor of the last worker hired.

      Asymmetric Information (Adverse Selection)

      Textbook Chapter: Chapter 22

      MobLab Game: Market for Lemons