The firm

Readings

• Introduction and 6.1-6.14 in Economy, Society, and Public Policy¹
• CORE team, “Richard Freeman: You can’t outsource responsibility”
• Marginal Revolution University, Asymmetric Information and Used Cars
• Marginal Revolution University, Asymmetric Information and Health Insurance
• Marginal Revolution University, Moral Hazard
• Marginal Revolution University, Solutions to Moral Hazard
• Look at these real-life examples of information asymmetries and principal-agent problems:
  • Sam Dolnick, “Air-Conditioners That Run When Nobody’s Home,” New York Times, August 15, 2010
  • Ceci Connolly, “U.S. worker’s case reveals how drug cartels get help from this side of border,” Washington Post, September 12, 2010
  • Rob Ferguson, “Ontario’s winter roads ‘less safe’ since privatization: auditor,” The Star, April 29, 2015

Other useful resources

A full example of finding income and substitution effects graphically is at the “Income and substitution effects” guide in the resources section.

Here are some other examples of finding income and substitution effects:

• Example Income and Substitution Effects for Normal and Inferior Goods
• Explanation of Income and Substitution Effects
• EC1002 Chapter 2 Lesson 2 - The Indifference Curve, Substitution, and Income Effect (this one is long and detailed, but still helpful, especially around minute 21)

Slides

Download the slides from today’s class.

Videos

Videos for each section of the lecture are available at this YouTube playlist.

• Introduction
• Income and substitution effects
• Firms
• Asymmetric information
• Owners, managers, and employees

You can also watch the playlist (and skip around to different sections) here: