New Fashioned Supply and Demand

I’ve just finished covering the supply and demand chapters of Cowen and Tabarrok.  My students are always quick to grasp demand and have a good intuitive sense of what will shift a demand curve inward or outward, but a subset of them have a harder time with shifts in supply.  I always emphasize that they should think of the supply curve as a cost curve — if one of the costs of making the product rises, then the supply curve will vertically rise in the graph.  What I really like about C&T is that they have this same emphasis — driving home the point that supply reflects costs.  Their “horizontal reading” versus “vertical reading” of the demand and supply curves is especially clear.  I wish that all textbooks used this language, since it is so straight-forward and easy for students to grasp.

My favorite innovation in the equilbrium chapter is the coverage of Vernon Smith, his fit of insomnia and subsequent birth of experimental economics.  I asked an extra credit question on yesterday’s quiz, asking students to identify Smith and many of them rattled off the exact dates of the first experiments and his Nobel Prize — a pretty good sign that they were equally intrigued by this section.  A discussion showed that students are convinced that experimental results are an important addition to economics.