August 31, 2026
Foundations + time · Week 02
From market equilibrium to social efficiency
Review the annual timber market, practice the tools with a fishery, and then ask what changes when timber harvest imposes costs outside the market.
Aug 31–Sep 4Lecture 2 → Classwork 1 → Lecture 3 → Classwork 2
Focus
- Demand, supply, equilibrium, and surplus
- Resource stocks versus harvest flows
- Private versus social marginal cost
Prepare
- Review prior supply-and-demand notes
- Read TL Chapter 2
- Bring a calculator for Classwork 1
Practice
- Solve a fish-harvest market
- Add omitted harm to the timber market
- Compare market and efficient harvest
Guiding question
When the annual timber market clears, what costs can its price still leave out?
Learning targets
- Solve a competitive market and measure gains from trade.
- Distinguish a resource stock from an annual harvest flow.
- Translate a negative external effect into a marginal social cost curve.
- Identify the market quantity, efficient quantity, and welfare loss.
- Explain how a Pigouvian instrument changes incentives.
Class plan
| Move | What we will do |
|---|---|
| Review | Use Lecture 2 to rebuild the timber-market benchmark |
| Practice | Use Classwork 1 to solve a fish market and connect harvest flow to stock |
| Extend | Use Lecture 3 to add timber-harvest damage to the private marginal cost |
| Synthesize | Compare market clearing with social efficiency |
Lecture slides
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