A rational agent considers both accounting profit and economic profit. In this video, see an example highlighting the difference between accounting profit and economic profit from a business and a discussion of explicit and implicit costs of operating a business.

In this video we explore how to derive the demand for a factor of production based on how productive that factor is and how much additional revenue that factor brings in. Created by Sal Khan.

Develops facility with concepts, language, and analytical tools of economics. Covers microeconomics, macroeconomics, and international trade and payments. Emphasizes integration of theory, data, and judgment in the analysis of corporate decisions and public policy, and in the assessment of changing US and international business environments. Restricted to Sloan Fellows. The fact of scarcity forces individuals, firms, and societies to choose among alternative uses -- or allocations -- of its limited resources. Accordingly, the first part of this summer course seeks to understand how economists model the choice process of individual consumers and firms, and how markets work to coordinate these choices. It also examines how well markets perform this function using the economist's criterion of market efficiency. Overall, this course focuses on microeconomics, with some topics from macroeconomics and international trade. It emphasizes the integration of theory, data, and judgment in the analysis of corporate decisions and public policy, and in the assessment of changing U.S. and international business environments.

In this video we illustrate and explain the differences between a change in the quantity demanded for a good (which causes a movement along a demand curve) and the change in a good's demand (which causes the entire demand curve to shift).

A demand shifter is a change that shifts the demand curve for a product. One of the demand shifters is buyers' expectations. If a buyer expects the price of a good to go down in the future, they hold off buying it today, so the demand for that good today decreases. On the other hand, if a buyer expects the price to go up in the future, the demand for the good today increases. Explore the role of buyers' expectations as a determinant of demand in this video. Created by Sal Khan.

A common error new economic students make is confusing changes in supply with changes in quantity supplied. A change in quantity supplied is a movement along the supply curve in response to a change in price. A change in supply is a shift of the entire supply curve in response to something besides price.

Previously we looked at what happens to the equilibrium price and quantity in a market if supply or demand change. In this video, we explore what happens when BOTH supply and demand are changing at the same time.

In this video, we explore how changes in a few factors affect the demand curve. Changes in income, population, and consumer preferences cause the entire demand curve to shift. Created by Sal Khan.

Changes in the supply of labor have an effect on the wage rate. The supply of labor shifts when there are changes in the population, changes in preferences and social norms, and changes in wage rates and opportunities in other markets. Learn how to show the effects of changes in labor supply on wage rates in this video.

When supply or demand change, the price and quantity in the market changes. See how a change in demand or supply affects price and quantity in this video. Created by Sal Khan.

Autarky describes a situation when countries are completely closed to trade. In this video, we explore what happens to the domestic price of a good, consumer surplus, and producer surplus, when an autarkic country opens to trade.

Trade benefits both agents when each specializes in what they have a comparative advantage in producing and trading with another agent who has a comparative advantage in something else. The gains from trade occur based on comparative advantage, not absolute advantage. Created by Sal Khan.

When two agents have differing opportunity costs, there is potential for both of the to benefit if they specialize in what they each have comparative advantage in. This video explores how two parties can get better outcomes by specializing in their comparative advantage and trading. Created by Sal Khan.

In this video we work through an example of a question like you might see on an AP microeconomics or AP Macroeconomics exam determining who has comparative advantage in producing a good using data from a table. Topics include how to calculate opportunity costs and determine who has comparative advantage based on opportunity cost.

An interesting case of price elasticity of demand is a demand curve with a constant unit elasticity. Explore what such a demand curve would look like in this video. Created by Sal Khan.

In this video, we introduce the concept of consumer surplus as the difference between marginal benefit and price paid. Created by Sal Khan.

Learn about how firms determine the optimal combination of capital and labor in this video.

Price of one good impacting quantity demanded of another. Created by Sal Khan.