Category: Teaching

Undergrads are taught many formulae for the Price Elasticity of Demand. The most common one I have encountered is the particularly unwieldy “midpoint formula”: The elasticity at one point is a little more reasonable: There…

Students ask me this all the time, so here’s my explanation of the three types of inefficiency. 1. Productive inefficiency. This is a supply-side idea. Mattie and Joe both produce bananas. The bananas are identical.…