How to Teach an Oil Shock?

This paper presents a method for teaching the impact of oil shocks on marginal costs to introductory and intermediate undergraduate economics students. Marginal costs are derived from a basic production function with capital, labor, and material inputs. An oil shock affects material-input prices, with effects depending on production’s energy intensity. Because oil shocks have historically been linked to recessions, the paper provides a pedagogical framework for connecting firm-level costs to macroeconomic outcomes. The approach is illustrated with an interactive classroom tool suitable for Principles students, while intermediate and advanced students can benefit from the formal analysis alongside the visualization.

by Petar Stankov

Download

Stankov, P. (2026). How to Teach an Oil Shock?. Available online at Journal of Economics Teaching, DOI: 10.58311/jeconteach/924db9fd23cc56f948e027c746529302f2aab2b9

Want to be notified of articles when they are released? Subscribe to our newsletter!