The long run and short run of it

When you teach economics, you spend a fair amount of time dwelling on the distinctions between the short run and the long run. If a firm is not making a profit but is meeting its short-run costs (e.g., wages, utilities), microeconomic theory says that the firm should continue in business rather than shut down. In … Read moreThe long run and short run of it

Gary Becker and the law of the jungle

The sub-prime crisis and the ensuing economic slowdown have led many to question some widely held economic tenets, particularly the belief that unfettered markets inevitably lead to the best of all possible outcomes. Writing in yesterday’s Wall Street Journal, University of Chicago economics professor and Nobel laureate Gary Becker whines about this assault on the … Read moreGary Becker and the law of the jungle