IB Economics
Price Elasticity of Demand
Oct 30th
Introductory Videos
Video: Price Elasticity of Demand – part 1 by pajholden
Video: Price Elasticity of Demand – part 1 by pajholden
Interactive Tutorials
Economics Interactive Tutorial by Samuel Baker (Univ of Carolina)
Elasticity — A Quantitative Approach by Samuel Baker (Univ of Carolina)
The Market System – Part 1 on biz/ed – contains section on PED towards end
Price elasticity of demand and basic application in Excel by Tushar Mehta
The following videos deal with the important concept of how price elasticity of demand relates to total revenue. They cover similar ground so you may not feel the need to watch all of them, but they do take different approaches in presentation.
Price Elasticity & Total Revenue by BrynJonesOnline
Total Revenue and Elasticity by ElmagicRonaldo
Elasticity and Revenue by jodiecongirl
Price Elasticity of Demand (PED) – own price elasticity by economicsfun
Good real life example on the determinants (factors affecting) Price Elasticity of Demand … ‘gasoline’ (or petrol):
In Summary
Price Elasticity: From Tires to Toothpicks (Econedlink)
Price Elasticity of Demand (tutor2u)
Price Elasticity of Demand
(Welker’s Wikinomics)
Finally, before moving on to Price Elasticity of Supply, this 15 minute video explaining an unusual ‘spike’ in gas prices in the US in 2002, is excellent and highly recommended for applying the theory to a real life example (the latter part gets a little bit tricky, but still recommended for IGCSE and IB students):
Output– Definitions of GDP
Oct 28th
These mjmfoodie videos are very useful for understanding the concepts of GDP, real GDP (as opposed to nominal/money GDP) and growth.
A Song about Elasticity
Oct 28th
Some people have a lot of time on their hands, but we should sometimes be grateful for that … this song summing up the different elasticities is worth a listen (you never know, it might even help you revise this particular topic …)
Cross Price Elasticity and Income Elasticity
Oct 25th
1) Cross Price Elasticity of Demand
A video from pajholden (click on the image below – this video can’t be embedded).
Image: 
Some rights reserved by avlxyz
2) Income Elasticity of Demand
A video from pajholden (click on the image below – this video can’t be embedded).
Image: Some rights reserved by AngelalalaChan
3) Both XED (Cross Price Elasticity of Demand) and YED (Income Elasticity of Demand)
The Effects of Price Controls
Oct 5th
This section of the IB syllabus requires you to understand the following:
- Maximum price: causes and consequences
- Minimum price: causes and consequences
- Price support/buffer stock schemes
Before learning about these concepts, it is first worth being sure of the following concepts:
- Consumer Surplus
- Producer Surplus
The rest of this post gives you links to online resources to help you become an expert in these concepts. Make sure you consult your text book(s) too, to provide further understanding.
Consumer and Producer Surplus
http://welkerswikinomics.wetpaint.com/page/Consumer+and+Producer+Surplus
Maximum prices and Minimum prices : causes and consequences
http://tutor2u.net/economics/revision-notes/as-marketfailure-maximum-prices.html (although you may not understand all of this yet – the bits on elasticity for example)
http://tutor2u.net/economics/content/topics/marketsinaction/black_markets.htm
http://www.fmhs.auckland.ac.nz/faculty/ltu/toni_ashton/supply-demand.swf [sections 7 and 8]
http://welkerswikinomics.wetpaint.com/page/Application%3A+Government-Set+Prices
Price support/buffer stock schemes
Supply and Demand Interacting – The Equilibrium Price
Sep 28th
Understand Demand? Understand Supply? Now we need both hands to clap, and when we put them together we can understand how prices are arrived at when market forces are left to their own devices (and also when they’re not). What Adam Smith called the invisible hand … you need to know this concept like the back of your own (not so invisible) hand.
Quite a lot of video tutorials on this fundamentally important economic concept.
Probably the best way to start (again) – take it away mjmfoodie:
Perhaps more detailed, jodiecongirl tackles market equilibrium:
But for an even deeper level of detail, here are two videos by richardmckenzie (note his tutorials are geared towards an MBA course!):
http://www.whitenova.com/thinkEconomics/supply.html
Now that you have hopefully grasped the fundamentals, it is worth checking your understanding further through these interactive tutorials:
http://hadm.sph.sc.edu/courses/econ/sd/sd.html
Notice that the above tutorial continues on to another page:
http://hadm.sph.sc.edu/courses/econ/sd/SD3.html
There are two good podcasts publishes by Biz/Ed which also include transcripts and possible questions:
Can the demand curve really slope upwards?
Sep 27th
Some rights reserved by Marshall Astor – Food Pornographer
Once you have learned about the theory behind Giffen goods, Veblen goods, and the role of expectations in theoretically causing an upwards sloping demand curves, it is well worth reading these articles:
As price goes up, so does demand – The Economist July 2007
How Rat Meat Becomes a Rarity – DANIEL HAMERMESH – NY Times
Remember: in IB Economics, it is always useful to be prepared to evaluate the assumptions behind the theory. Do you still accept that the demand curve can slope upwards? Why / why not? What assumptions have been made?
Supply
Sep 27th
Introduction and summary by MJMFoodie:
jodiecongirl runs through the determinants of supply:
jodiecongirl explains movements along and shifts of the supply curve:
Follow up activities to check your understanding:
Original MS Powerpoint file here
Causes of Inflation
Sep 14th
MJMFoodie overview:
1) Monetary Inflation
Watch the first part of this video until 1 minute 30 seconds in (you can watch the rest for a historical example of inflation in the US, but this is not essential to our understanding at this point)
2) Demand Pull and Cost Push Inflation
Introducing Demand
Sep 13th
EXCEL spreadhseet to explore / predict how a demand ‘curve’ might work.
MJMFoodie video introducing demand:
Slideshow to prompt discussion / thought around the different variables that might move the demand curve. [IB students should know how this relates to the concept of ceteris paribus (look it up) and that changes in these variables are breaking the ceteris paribus assumption. IGCSE students need not worry too much about this.]
Link to original MS Powerpoint here.
If you need to review this, see the video on determinants of demand by jodiecongirl
These changes cause the entire demand curve to shift either to the left or the right.
MJMFoodie video on change in demand versus change in quantity demanded
Check the difference between “movements along" and “shifts of” the demand curve by exploring these interactive examples:
Changes to the Demand Curve at www.joehoy.com
You need to be really clear that demand is different from quantity demanded. This interactive tutorial by www.reffonomics.com should emphasise this even more:
The Difference Between Quantity Demanded and Demand
Also, jodiecongirl gives an excellent summary on changes in demand and shifts of the demand curve:
Once you think you have understood the concepts introduced above, here are some activities to attempt on line to check and consolidate your understanding.
Economics Interactive Tutorial by Sam Baker at the University of South Carolina
Visit this animation and explore it to answer the following questions:
http://www.bized.co.uk/learn/economics/markets/mechanism/interactive/demand1.swf
The diagram shows the amount consumers would like to purchase at a price of £5 (32) What happens in the following cases?
- Price rises to 8
- Price rises to 9
- Price falls to 3
- Price falls to 1
Explain why people may react in the way you have observed.
[Activity taken from http://www.bized.co.uk/learn/economics/markets/mechanism/interactive/part1.htm]
