Perfect competition is a theoretical market structure in which there are many buyers and sellers, identical products (also called homogeneous products), perfect information, and no barriers to entry.

Economists use the concept of price elasticity of demand to describe how the quantity demanded changes in response to a price change. In this video, explore a simple way to calculate the price elasticity of demand, how to interpret that calculation, and how price elasticity of demand varies along a demand curve.

We can calculate the price elasticity of supply to gauge how sensitive percent changes in quantity supplied are to percent changes in price.

Production functions describe how output is determined by various inputs. The short run is defined as the period of time in which at least one input is fixed. Anything longer than that is considered the long run.

In this video, the economic concepts of utility and marginal utility are introduced.

" This course is an introduction to labor economics with an emphasis on applied microeconomic theory and empirical analysis. We are especially interested in the link between research and public policy. Topics to be covered include: labor supply and demand, taxes and transfers, minimum wages, immigration, human capital, education production, inequality, discrimination, unions and strikes, and unemployment."

The basis of the labor supply curve is the tradeoff of labor and leisure. When wages increase, the opportunity cost of leisure increases and people supply more labor. Interestingly, this is not always the case! At higher wages, the marginal benefit of higher wages becomes lower and when it drops below the marginal benefit of leisure, people switch to more leisure and less labor. This leads to the rather unusual looking backward bending labor supply curve.

The law of demand states that as the price of a good decreases, the quantity demanded of that good increases. In other words, the law of demand states that the demand curve, as a function of price and quantity, is always downward sloping. In this video, we explore the law of demand and its implications for graphing demand curves. Created by Sal Khan.

In this video we explore the law of supply which states that quantity supplied increases as price increases. We use a supply schedule to describe the quantities a seller is willing to sell at different prices, and then translate the supply schedule into a supply curve that illustrates the law of supply. Created by Sal Khan.

In this video we explore the long run average total cost curve and how average costs vary when all inputs can be adjusted.

In this video, we compare and contrast the long run outcomes for monopolistic competition, monopolies, and perfect competition.

A firm in a perfectly competitive market might be able to earn economic profit in the short run, but not in the long run. Learn about the process that brings a firm to normal economic profits in this video.

A constant cost industry is an industry where each firm's costs aren't impacted by the entry or exit of new firms. Learn about the difference between the short run market supply curve and the long run market supply curve for perfectly competitive firms in constant cost industries in this video.

In some industries, the number of firms in the market has an impact on the costs that firms face. For example, when firms have to compete with each other over resources, firms' costs increase as more firms enter the market. But in other industries, more firms actually lower costs for firms. Learn about the implications of each of these situations on the long-run supply curve in an industry.

Understanding the long term supply curve in terms of economic profit. Created by Sal Khan.

In this video we calculate the costs of producing a good, including fixed costs, variable costs, marginal cost, average variable cost, average fixed cost, and average total cost.

Given the cost of producing a good, what is the best quantity to produce? In this video we explore one of the most fundamental rules in microeconomics: a rational producer produces the quantity where marginal revenue equals marginal costs. Created by Sal Khan.

This video discusses the differences in a graph of marginal cost and marginal revenue for an imperfectly competitive firm compared to a perfectly competitive firm.

People sometimes assume that a firm that isn't earning a profit should immediately shut down. In this video, we explore why that might not actually be a very good idea, and why it might be rational to produce at a loss. Created by Sal Khan.

If you have $5 to spend on two goods, how do you decide to spend it? In this video, we use the concepts of marginal utility and marginal benefit to decide how best to allocate a budget. Created by Sal Khan.