Collegeeconomics

We found 6 articles

Pareto efficient allocations and fairness in economics
A very important concept when it comes to thinking about markets in economics is the idea of Pareto efficiency. An allocation of resources is Pareto efficient if it is not possible to make anyone better off without making someone else worse off.
Learning the basics of Game Theory
Imagine that you and a friend are going to the movies. You like comedies more than action movies, while your friend likes action movies a lot more than comedies. If you go to see a movie alone, however, you’re probably not going to have as much fun, regardless of what type of movie you see. What is the optimal behavior for each person in this ...
Understanding elasticity of demand in economics
You may have heard in your econ class about a good’s elasticity of demand, or about “elastic” or “inelastic” goods. Consumers’ elasticity of demand is just a fancy way economists talk about how sensitive people are to changes in a good’s price.
An introduction to choice theory: are humans really 'rational actors?'
If you are a student of economics, one of the first axioms you are instructed to adapt is that everyone should be considered a “rational actor.” What this means is that all people who take part in economic decisions and transactions are informed by self-interest and do so in a manner that maximizes their potential self-benefit.  This is essential ...
How to use probability trees to evaluate conditional probability
  If you’re majoring in economics, you will likely also need to take a statistics course.  One of the trickiest concepts is dealing with conditional probabilities.  In most classes, they teach you a fairly complicated equation known as Bayes’ Theorem. While this isn’t a hard formula to plug values into, it doesn’t give an intuitive understanding ...
Marginal Rate of Substitution (MRS), Marginal Utility (MU), and how they relate
In this post, I start off by explaining the Marginal Rate of Substitution (Sections II-IV). Then, I cover the concept of Marginal Utility (Sections V-VII). In both cases, I start with a story explanation, then give a formal definition, and finally provide some other useful information about the concept. After that, I connect the two concepts ...