4SSMN136

PRINCIPLES OF ECONOMICS

Lecture 4
 Roadmap for this lecture
Government policies and their cost
1. Sales taxes
– Effects on market equilibrium
– Tax incidence and elasticities
– Costs and benefits of taxation

2. Quantity controls
– Effects on market equilibrium
– Costs and benefits

3. Price controls
– Effects on market equilibrium
– Costs and benefits 2

Reading: Chap 8, 9
 RECAP...
Total surplus
The sum of CS and PS is called total surplus
The total surplus is a measure of the total net gain to consumers
and producers and thus a measure of the economic welfare

Market equilibrium of competitive

demand and supply
maximises economic welfare

This is efficient in the

sense of maximizing
surplus from exchange
3
 RECAP...

Anything that creates a wedge between demand and

supply will move the market away from this efficiency
point and generate economic inefficiency.

The extent of inefficiency can be measured by the

deadweight loss generated by the wedge

Where does it come from? Missed exchanges that

create surplus. (We’ll see this a few ways.)
4
Tea and Taxes
Tariffs were the greatest (approaching
95% at times) source of US federal
revenue until the Federal income tax
began after 1913.

What are some other examples of

non-income taxes?
 I. Per unit Tax
Per-unit tax: fixed tax that either consumers or producers of a good have to
pay for each unit of the good traded

1. Impact on the equilibrium of a competitive market

a. Per unit tax levied on suppliers
Market for taxi rides
in NY
Fare ($)
Market for taxi rides:
12
$2 S Initial equilibrium: Q = 10 & P = $6
9

6
E Supposed government imposes a $2 per unit
tax on taxi drivers
3
D ➔taxi drivers have to give $2 to tax
authorities for every ride they supply
0 5 10 15 20 Quantity ofrides
(millions/yr)
6
 I. Per unit Tax

1. Impact on the equilibrium of a competitive market

a. Per unit tax levied on suppliers

Market for taxi rides

in NY
Fare ($) If government imposes a $2 per unit tax on
taxi drivers...
S2
12
$2 S1 • taxi drivers have to give $2 for every ride
9 they supply
E
6
• this leads to a parallel shift of the supply
3
curve up and to the left (from S1 to S2):
supply price will be $2 higher for every
D
quantity
0 5 10 15 20 Quantity ofrides
(millions/yr)
7
 I. Per unit Tax
a. Per unit tax levied on suppliers

With the shift of the supply curve...

Market for taxi rides
in NY • Equilibrium quantity decreases from 10 to
Fare ($)
8 million rides
S2 • Equilibrium price (i.e. price paid by
12
$2 S1 consumers) will increase from $6 to
9
$7/ride (point x1)
X1
Pconsumers ➔ 7
6 E
$2 But because of the tax...
Pproducers ➔ 5
• Price kept by taxi drivers will be only
X2
3 $5/ride (point x2)
D • Amount given to government (by taxi
Quantity of rides drivers) = $2/ride = per unit tax
0 5 8 10 15 20
(millions/yr)

8
 I. Per unit Tax
b. Per unit tax levied on consumers

Market for taxi rides If government imposes a $2 per unit tax on

in NY consumers...
Fare ($)

12 • consumers have to pay an extra $2 (on top

S of the price they pay to the driver) for every
9 taxi ride they take
6 E
• this leads to a parallel shift of the demand
$2
curve down and to the left (from D1 to D2):
3
demand price will be $2 lower for every
D2 D1 quantity
0 5 10 15 20 Quantity ofrides
(millions/yr)

9
 I. Per unit Tax
b. Per unit tax levied on consumers

With the shift of the demand curve...

Market for taxi rides
in NY • Equilibrium quantity decreases from 10 to
Fare ($)
8 million rides
12
• Equilibrium price (i.e. price charged by taxi
S riders) will fall from $6 to $5/ride (point X2)
9
X1
Pconsumers ➔ 7 But because of the tax...
6 E
$2
Pproducers ➔ 5
• Price paid by consumers will be $7/ride
(pointX1)
3 X2 $2
• Amount given to government (by
D2 D1 consumers) = $2/ride = per unit tax
0 5 8 10 15 20 Quantity ofrides
(millions/yr)
Same results as before!
It doesn’t matter who pays the tax to the
government: Pconsumer , Pproducer and
equilibrium quantity will be the same
10
 I. Per unit Tax
1. Impact on the equilibrium of a competitive market
To sum up...
The final outcome of per unit taxes is the same either when it’s levied on
the supplier and or the consumer:

• The price paid by consumers increases (from $6 to $7/ride)

• The price effectively received by the supplier decreases (from $6 to

$5/ride)

• The equilibrium quantity falls (from 10 to 8 million rides)

• The government gets the difference between the price paid by consumers
and the price received by suppliers ($2/ride)

11
Exercise
Thinking about the case of completely
inelastic demand, what happens to
price and quantity in a market when a
per unit tax of T is applied?

(Maybe drawing a picture helps…)

 I. Per unit Tax
2. Tax incidence (or Tax burden)
The tax incidence concerns the issue of who really bears the
burden of the tax

In the previous example, the $2/ride tax results in a $1/ride rise in the price
paid by consumers and a $1/ride fall in the price received by suppliers
➔ incidence of the tax was evenly split
between buyers and sellers

But that’s not always the case. Sometimes one side

bears a disproportionately large share of the tax
burden... 13
 I. Per unit Tax
The elasticities of supply and demand are important to
determine how the burden of paying a per unit tax is shared
between consumers and producers

a. Price inelastic demand + price elastic supply

Price
(£ / litre)
S2 At the initial equilibrium price = £1.2
E2 £1 tax
2 S1 After an per unit tax of £1 is imposed:

£1 1.2 E1 • Price paid by consumers = £2

tax 1 • Price received by producers = £1
D
Quantity of
soda cans
14
 I. Per unit Tax
a. Price inelastic demand + price elastic supply (cont.)

Consumers pay most of the tax!

Price Reason?
(£ / litre)
S2
• When demand is price inelastic
E2 £1 tax
2 S1 producers can easily pass on most
of the tax to consumers without
£1 1.2 E1 fearing a large fall in quantity
tax 1 demanded
D
• Plus, if in addition supply is elastic
Quantity of
soda cans price received by suppliers will not
fall too much if there is a reduction
in quantity supplied at the new
equilibrium
15
 I. Per unit Tax

b. Price elastic demand + price inelastic supply

S2
Price (£) S1
£1
tax

E2
At the initial equilibrium price = £4
4.2 E1
4 After an per unit tax of £1 is imposed:
£1
tax 3.2
• Price paid by consumers = £4.2
D
• Price received by producers = £3.2

Quantity of
parking spaces

16
 I. Per unit Tax

b. Price elastic demand + price inelastic supply (cont.)

Producers pay most of the tax!
Price (£) S1
£1
tax
Reason?

E2 • When demand is price elastic

4.2 E1
producers cannot easily pass on
4
£1
the tax to consumers without
tax 3.2 causing a large fall in the quantity
D demanded

• In addition, because supply is

inelastic the quantity supplied will
Quantity of
not fall much even if there is a large
parking spaces reduction in the price received by
producers at the new equilibrium
17
 I. Per unit Tax

To sum up...
The more price insensitive (i.e. the more price
inelastic), the greater the tax burden!

• If demand more price inelastic than supply =>

consumers bear most of the tax

• If demand is more price elastic than supply =>

producers bear most of the tax

So far this is a positive analysis, now a normative

or welfare analysis 18
 I. Per unit Tax
3. Costs & Benefits of a Tax

The tax creates a wedge between the price paid by consumers

and the price that producers effectively receive

Typically, the per unit tax will lead to:

• a rise in the price paid by consumers These will result
• a fall in the price received by producers in a reduction in
• a reduction in the quantity traded CS and PS

The tax will generate revenue for the government

But, typically, at expenses of a deadweight loss for the society

19
 I. Per unit Tax
3. Costs & Benefits of a Tax: change in CS and PS

Example:
If per unit tax of size T is imposed:
S’

• Quantity falls from QE to QT

• Price paid by consumers rises to
Pc
A
• Price received by producers falls
to Pp

How does this change CS?

CS is reduced by area

How does this change PS?

PS is reduced by area

20
 I. Per unit Tax
3. Costs & Benefits of a Tax: change in CS and PS

Example:
If per unit tax of size T is imposed:
S’

• Quantity falls from QE to QT

• Price paid by consumers rises to
Pc
A
• Price received by producers falls
to Pp

How does this change CS?

CS is reduced by area A+B

How does this change PS?

PS is reduced by area C+F

21
 I. Per unit Tax
3. Cost & Benefits: Tax Revenue
The tax revenue corresponds to the total amount of money
collected by the government after imposing the tax

How much money does the government collect?

• Sales tax is T/ unit
• Quantity traded after tax is QT

Thus,
Total tax revenue = T x QT

Example:
In the taxi rides market: Tax = $2 and QT = 8 million
Thus, revenue collected by government = $2 x 8million = $16 million
22
 I. Per unit Tax
3. Cost & Benefits: Tax Revenue

S’

If per unit tax of size T is imposed:

A Government revenue corresponds

to square A + C

Area = T x QT

23
 I. Per unit Tax
3. Cost & Benefits: Deadweight Loss
The DWL loss of the tax will correspond to the loss in consumer and producer
surplus that is not captured by the government as tax revenue => mutually
beneficial trades that do not take place because of the tax

S’
• Loss in CS = A+B
• Loss in PS = C+F
• Gain in revenue for gvt = A+C

A
What’s the deadweight loss?

24
 I. Per unit Tax
3. Cost & Benefits: Deadweight Loss
The DWL loss of the tax will correspond to the loss in consumer and producer
surplus that is not captured by the government as tax revenue => mutually
beneficial trades that do not take place because of the tax

S’
• Loss in CS = A+B
• Loss in PS = C+F
• Gain in revenue for gvt = A+C

A
What’s the deadweight loss?

DWL corresponds to area B+F

25
 I. Per unit Tax
3. Cost & Benefits
To sum up...
• The imposition of the per unit tax leads to a reduction in both
consumer and producer surplus (which is a measure of how much
consumers & producers are hurt by the tax)

• Government appropriates some of the loss in consumer and

producer surplus in the form of tax revenue

• However, there is some loss in consumer and producer surplus

that is not offset by a gain to the government – that is the
deadweight loss, which represents a reduction in welfare or
loss in efficiency to the whole economy
26
 I. Per unit Tax

What if instead of a per-unit tax, a per-unit subsidy is enacted?

What impact on welfare

would it have?

27
 I. Per unit Tax
4. Price elasticity and DWL
• The incidence of the tax (i.e. whether the burden of the tax
falls on consumers or producers) depends on the relative price
elasticities of demand and supply

• The size of the deadweight loss also depends on the

elasticities of the demand and supply curves

The more (price) elastic the demand and supply

the greater the deadweight loss of a tax!

28
 I. Per unit Tax
4. Price elasticity and DWL

S’ The per unit tax (T) drives a wedge by

increasing the price paid by consumer,
reducing the price received by producers
and reducing the quantity traded – this
creates the DWL

Thus, the more responsive are quantities

demanded/supplied to changes in prices
(i.e. the more elastic D and S curves) the
greater the reduction in the quantity
traded after the tax, and the greater the
DWL!

29
 I. Per unit Tax
4. Price elasticity and DWL
Some examples...

S’
S’

30
 I. Per unit Tax
4. Price elasticity and DWL
Some examples...

S’
S’

31
 I. Per unit Tax
4. Price elasticity and DWL

There are some cases when the imposition of a tax DOES NOT
create any deadweight loss at all...

When does that happen?

32
Quantity Controls
There are some obvious examples of
quantity controls.

What are a few examples in the UK?

The rest of the world?
 II. Quantity controls
Quantity controls: a quantity control or quota is an upper limit on the
amount of some good that can be bought or sold on a market
Typically the government imposes a quota limit by issuing licenses to suppliers

1. Impact on the equilibrium of a competitive market

Fare ($)
Market for taxi rides in
NY

S In the absence of government

intervention,
E
6 market equilibrium will be at
Pe=6 and Qe=10

D
0 Quantity of rides
10
(millions/yr) 31
 II. Quantity controls

Fare ($) Market for taxi rides in If government imposes a binding quota
NY
to the quantity of taxi rides equal to 8
S by issuing licenses...

7
wedge 6
E - consumers will pay a fare of
5 $7 per ride if they are to demand 8
million rides
D
0 8 10 Quantity of rides - taxi drivers must receive a fare of
Quota limit (millions/yr) $5 per ride if they are to supply 8
million rides

Quota rent is kept by the owner of

Difference between prices is the
the license and creates a wedge
between demand and supply prices quota rent
35
 II. Quantity controls

How does this quota compare to the per unit tax with
respect to the effect on prices and quantities?

36
 II. Quantity controls
2. Costs & Benefits of a Quota
The use of (binding) quantity controls generates a (Pareto) inefficient
allocation of resources

Potential mutually beneficial trades don’t take place

Consider a situation where 8 million rides are

Fare ($) Market for taxi rides in being traded:
NY
• Consumers would be willing to pay at
S
least $6.5/ride for an extra 1 million
7 A rides (point A on demand curve)
wedge 6 E
5 B
• Producers would be willing to supply
the extra million rides for no more
D
than $5.5/ride (point B on supply
8 10 Quantity of rides
0
Quota limit (millions/yr) curve)
37
 II. Quantity controls
2. Costs & Benefits of a Quota

Quota prevents 2 million of

Fare ($) Market for taxi rides in mutually beneficial trades from
NY taking place!
S

7 A
wedge 6 E
5 B

D
Quantity of rides
Quota creates missed opportunities
0 8 10
Quota limit (millions/yr) (and an incentive for the
emergence of illegal activities)

38
 II. Quantity controls

So why do governments use

quantity controls?

39
 II. Quantity controls
2. Costs & Benefits of a Quota
Imposing a quota reduces the quantity traded in the market
below the competitive output (i.e. where demand equals supply)
and lowers welfare
Market for taxi rides in
Fare ($) NY At the initial equilibrium (before quota):
12
10 million units are traded at price $6
C
A
7
B
Thus,
6
5 D • Consumer surplus is given by area
E • Producer surplus is given by area
F

0 8 10 Quantity of rides
(millions/yr)
Quota limit
40
 II. Quantity controls
2. Costs & Benefits of a Quota

Market for taxi rides in

Fare ($) NY At the initial equilibrium (before quota):
12
10 million units are traded at price $6
C
A
7
6 B Thus,
5 D • Consumer surplus is given by area A+B+C
E
F
• Producer surplus is given by area D+E+F

0 8 10 Quantity of rides
(millions/yr)
Quota limit

41
 II. Quantity controls
2. Costs & Benefits of a Quota

After the introduction of the quota…

Market for taxi rides in
Fare ($) NY
• Quota lowers output from 10 to 8
12 • A wedge is created between price consumers
are WTP (7) and price producers are WTA (5)
C
A
7
6 B Thus,
D
5 • New consumer surplus is given by area
E
F
• New producer surplus is given by area
0 8 10 Quantity of rides
(millions/yr)
Quota limit (assuming producer is also the license owner; if
not producer surplus is area E only and B + D is
absorbed by the license owner)

42
 II. Quantity controls
2. Costs & Benefits of a Quota

After the introduction of the quota…

Market for taxi rides in
Fare ($) NY
• Quota lowers output from 10 to 8
12 • A wedge is created between price consumers
are WTP (7) and price producers are WTA (5)
C
A
7
6 B Thus,
D
5 • New consumer surplus is given by area A
E
F
• New producer surplus is given by area
0 8 10 Quantity of rides B+D+E
(millions/yr)
Quota limit (assuming producer is also the license owner; if
not producer surplus is area E only and B + D is
absorbed by the license owner)

43
 II. Quantity controls
2. Costs & Benefits of a Quota
Imposing a quota reduces the quantity traded in the market
below the competitive output (i.e. where demand equals supply)
and lowers welfare
Market for taxi rides in
Compared to the initial equilibrium quota
Fare ($) NY
results in…
12

C
• Change in consumer surplus given
A
by areas - B - C
7
6 B
5 D
• Change in producer surplus given
E
F by areas + B - F

0 8 10 Quantity of rides • A deadweight loss given by area C & F

(millions/yr)
Quota limit
44
 Licensing (And Why Do This?)

The Adventurers convened again a year later, on 31 December, and this time they succeeded; the
Queen granted a Royal Charter to "George, Earl of Cumberland, and 215 Knights, Aldermen, and
Burgesses" under the name, Governor and Company of Merchants of London trading with the East
Indies. For a period of fifteen years, the charter awarded the newly formed company a monopoly on
English trade with all countries east of the Cape of Good Hope and west of the Straits of Magellan.

Any traders in breach of the charter without a licence from the company were liable to forfeiture of
their ships and cargo (half of which went to the Crown and the other half to the company), as well as
imprisonment at the "royal pleasure".
Price Controls

Price controls are symptomatic of a

planned economy (e.g. wartime).

Any examples come to mind

(presently or from history)?
 III. Price controls
Price controls: government regulations that control the price that
prevails in the market (price ceilings , price floors)
A. Price ceilings
A price ceiling stipulates that market prices cannot rise above a
certain level. It’s a maximum price
E.g.: rent control; tuition fees; price of some essential goods (milk, bread)

Monthly
rent (€) Suppose market for rented
600
accommodation...
S
500 Without government intervention
400
E market equilibrium will be:

300 Pe=400 and Qe=200

D
Quantity of flats 42
0 200
(thousands)
 III.A Price ceiling
1. Impact on the equilibrium of a competitive market

Market for rented If government imposes a binding

accommodation price ceiling on rents of
Monthly
rent (€) €300/month...
600
S - quantity demanded will increase:
500 Qd= 275
400
- quantity supplied will decrease:
300 Qs=75
D
0 75 Quantity of flats
200 275
(thousands)
Shortage
or There’s a shortage of
Excess demand
200,000 units!

48
 III.A Price ceiling
1. Impact on the equilibrium of a competitive market

With the price ceiling on rents at €300/month 200,000 families who want to
rent flats at that price cannot get them

This is a (Pareto) inefficient market outcome:

there are ways resources in this market could be reallocated that
would make some people better off at no cost for anyone else

There could be mutually beneficial trade between households:

e.g. one willing to rent its apartment for €350 and one willing to pay up to
€500 for that apartment

The price ceiling on rents creates missed opportunities

49
 III.A Price ceiling
1. Impact on the equilibrium of a competitive market

Three types of inefficiency created by the rent controls:

i. Inefficient allocation to customers

Some people might be desperate to get a flat and would be willing to pay
above the price ceiling, while others are less needy.

Under an efficient allocation those more in need (i.e. willing too pay
more) would get the flats in the market.

Under rent control, allocation is usually determined by luck or personal

connections ➔ incentive for emergence of black (and grey) markets

50
 III.A Price ceiling
1. Impact on the equilibrium of a competitive market

ii. Wasted resources

The shortage of flats in the market increases searching costs: people
waste time looking for flats
The opportunity cost of that time is a wasted resource for the economy
as a whole

iii. Inefficiently low quality

Landlords have no incentive to make improvements: they cannot raise
rents to recover the money spent; due to the shortage of flats in the
market they will always find a tenant regardless of the state of the flat

51
 III.A Price ceiling
2. Costs and Benefits of price ceilings

Market for rented

accommodation
Monthly
rent (€)
At the initial equilibrium E:
S
A • Consumer surplus = A + B
B
400
C E • Producer surplus = C + D+ E
300
D
D
0 75 Quantity of flats
200 275
(thousands)

53
 III.A Price ceiling
2. Costs and Benefits of price ceilings

Market for rented

accommodation
Monthly With a price ceiling = 300
rent (€) (and quantity traded = 75):

S
• New consumer surplus given
A
B
by area
400
C E
• New producer surplus given by
300
D area
D
0 75 Quantity of flats
200 275
(thousands)

54
 III.A Price ceiling
2. Costs and Benefits of price ceilings

Market for rented

accommodation
Monthly With a price ceiling = 300
rent (€) (and quantity traded = 75):

S
• New consumer surplus given
A
B
by area A + C
400
C E
• New producer surplus given by
300
D area D
D
0 75 Quantity of flats
200 275
(thousands)

55
 III.A Price ceiling
2. Costs and Benefits of price ceilings

Market for rented

accommodation Thus, comparing the 2 equilibria:
Monthly
rent (€)
• Change in consumer surplus is:
S +C-B
A
B • Change in producer surplus is:
400
C E -C-E
300
D
D • Deadweight loss for society is:
Quantity of flats B&E
0 75 200 275
(thousands)

56
 III.B Price floor
B. Price floors
A price floor stipulates that market prices cannot fall below a
certain level. It’s a minimum price.

E.g.: minimum wage; price floor for agricultural products; price floor for butter

Monthly Labour Market

wage

S In the absence of government

intervention
E market equilibrium will be at We and Le
we

D
0 Quantity of
Le
labour

57
 III.B Price floor
B. Price floors
1. Impact on the equilibrium of a competitive market

Labour Market
Monthly
wage If government imposes a binding price
floor on wages at wmin...
S
wmin - labour supply will increase to Ls
we
- labour demand will decrease to Ld

D
0 Ld Ls Quantity of
Le
labour
Surplus
There’s unemployment (Ls – Ld)!

58
 III.B Price floor
1. Impact on the equilibrium of a competitive market
With the imposition of the min wage there’s an excess supply of
labour (i.e. unemployment) equal to Ls – Ld workers who would
like to work at the min wage (Wmin) but cannot find a job

There could be mutually beneficial trade between employers

and workers: some workers would be willing to work at a wage below the
wmin; some employers would be willing to hire if they could pay we

The price floor on wages creates missed opportunities

....But do we want people to work at very low wages?...

59
 III.B Price floor

Three types of inefficiency created by the rent controls:

i. Inefficient allocation of sales among sellers

Under a binding price floor, market won’t clear ➔ incentive for
emergence of illegal parallel market trading at lower prices

ii. Wasted resources

The scarcity of jobs increases searching costs: people waste time looking
for a job
Product surplus (e.g. agricultural products) represents wasted resources
governments have to get rid of

iii. Inefficiently high quality

Suppliers spend to make goods of high quality, but buyers would rather
receive the money spent on that quality in the form of a lower price 55
 III.B Price floor
1. Impact on the equilibrium of a competitive market

So, why are price controls imposed?

• They do benefit (at least) some people

• Governments desire to promote equity and fairness

• `Visible voters’ e.g. rent control in NYC

• Reduction of risk, allows for contracts and planning

• Imperfect information and rents can make this a ‘second

best’ policy
61
 III.B Price floor
2. Costs and Benefits of a price floor

Imposing a price floor forces the price above the equilibrium

level and results in excess supply

Example: At the initial equilibrium e:

• Q1 = 2.1 and P1 =4.59

Price floor • Consumer surplus = A + B + C

• Producer surplus = E + F
G
If government imposes a price floor = $5
H

• Qd = 1.9 and Qs =2.2

• Excess supply = 0.3
62
 III.B Price floor

2. Costs and Benefits of a price floor

With price floor = $5 and assuming Gvt buys

excess supply:

• Qd = 1.9 and Qs = 2.2

Price floor

• New consumer surplus is given by

area
G
• New producer surplus is given by
H
area

• Government expenditure (to buy

excess supply) is given by area

63
 III.B Price floor
2. Costs and Benefits of a price floor

With price floor = $5 and assuming Gvt buys

excess supply:

• Qd = 1.9 and Qs = 2.2

Price floor

• New consumer surplus is given by

area A
G
• New producer surplus is given by
H
area B + C + D + E + F

• Government expenditure (to buy

excess supply) is given by area
C+D+F+G+H
64
 III.B Price floor
2. Costs and Benefits of a price floor

Thus, comparing the 2 equilibria:

• Change in consumer surplus is

Price floor
-B-C

• Change in producer surplus is

+B + C + D
G

H • Change in government balance

–C–D–F–G–H

• Deadweight loss of the price floor is

65
 III.B Price floor
2. Costs and Benefits of a price floor

Thus, comparing the 2 equilibria:

• Change in consumer surplus is

Price floor
-B-C

• Change in producer surplus is

+B + C + D
G

H • Change in government balance sheet

-C–D–F–G-H

• Deadweight loss of the price floor is

C + F + G + H (grey area)

66
 Homework

Q: In which market does the imposition of a sales tax

generate more inefficiency: train travel or cigarettes?

67
 Summary of Today

Government policies and their cost

1. Sales taxes
– Effects on market equilibrium
– Tax incidence and elasticities
– Costs and benefits of taxation

2. Quantity controls
– Effects on market equilibrium
– Costs and benefits

3. Price controls
– Effects on market equilibrium
– Costs and benefits
 Idea Review
1. Trade-offs and TANSTAAFL
2. Fish and Coconuts
3. The Revolution Will Not Be Televised (Plastic People)
4. Ludenwic and Lundenburgh (Londinium)
5. Gumtree and Craigslist
6. Meat consumption and GDP per capita
7. London housing
8. Cocaine and Portuguese Drug Policy
9. Daraprim from $1 to $375
10. Daraprim revenues
11. Opioids and Heroin
12. Coffee vs Movies vs Foreign Travel (long run)
13. Beer Consumption versus the price of Wine
14. Tea Party Old and New
15. Gandhi’s March to the Sea
16. Kids with Bazookas
17. AK47s in Afghanistan
18. East India Company
19. Wartime and President Nixon
Final Thoughts

Stand Up Economist (5 minutes, you

should get the jokes by now):

Mankiw’s Ten Principles of Economics,

translated https://bit.ly/2PB2dAq

I hope you’ve enjoyed this class, KCL

and London so far.

If there are things you particularly like

about the class please do share them on
comments so we can focus on those for
next year.

Good luck!