Plain Sense Economics

This post will be useful in the fall, when I hold a Principles of Microeconomics class. In that class we take a look at the market for labor, including productivity. We know that if we add a production input, like labor, but hold other inputs (like capital equipment) steady, that marginal improvements to output will [...]

Congress has been deadlocked on the issue of restoring or changing the tax cuts passed in 2001 and 2003. Those original cuts had a sunset provision – the cuts end on December 31, 2010. If Congress does nothing, income tax rates, including capital gains and estate taxes, return to their 2000 levels.  Democrats want to [...]

In Principles of Microeconomics this week we talked about labor markets and how wages should rise as worker productivity rises. In Principles of Macroeconomics this week we talked about the concept of “sticky wages” – where, in the short run employers adjust their production/output when demand falls, but don’t immediately adjust wages downward.
This article in [...]

In Microeconomics today we talked about how wages are set in part by the dollar value of the marginal product of labor (the incremental dollar value of adding one more worker) and the supply of those workers.
In his blog in October, Greg Mankiw pointed to a chart from PhDComics.com that is sure to warm the [...]