One thing I find frustrating about the whole health care debate, on both sides, is the presumption that more doctors and hospitals and technologies (either paid by the private or public sector) is the lowest cost way of improving the health of the population. But given how many illnesses are caused by lifestyle (overeating, excessive drinking, smoking) or environmental (pollution) factors, we need to be considering other solutions to improve health. A Pigovian tax on sources of air pollution offset by lower income taxes would improve the health of the population, be a net benefit to the economy (by replacing an economically damaging tax with a less damaging one) and come at zero financial cost. Why do I feel like I am the only economist, on either the left or the right, talking about these things?

More here: One Economist's Thoughts On the Health Care Debate.

It is a common topic in first year microeconomics courses that often confuses students. I hope this walkthrough helps - Price Elasticity - How to Use Cross Price and Own Price Elasticity.

A reader has a question about the role expansionary monetary policy plays in the AD/AS model. See my response here: Expansionary Monetary Policy, Aggregate Demand, and Inflation Adjusted Wages.

If you buy this argument, they do:

It seems to me that the best way to instantly raise your standard of living is to live in the past. If you subsist entirely on two-year-old entertainment, and the corresponding two-year-old technology used to power it, you're cutting your fun budget in half, freeing up that money for more exciting expenditures like parking meters and postage.

This makes sense to me. I don't mean used goods here, rather new goods that are 2-year old technology. They are way, way cheaper than what they cost when they were originally launched. Mind you, you can only take this so far - you cannot, for instance, buy a brand new Commodore 64 at Best Buy. But you can for a number of goods. I find it difficult to find 1980's style wood hockey sticks, but when they are in a store I can get them for cheaper than I could have in the 1980s.

However, when we measure inflation, we compare the year 2007 price of a DVD of a movie released in 2007, with the 2009 price of a DVD of a movie released in 2009. But what if we instead compared it to the 2009 price of a DVD of a movie released in 2007. If we did, we would see much lower levels of inflation than the statistics indicate.