Comments on: American auto makers insult the intelligence of high school Econ students! http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/ for students and teachers of Economics Thu, 09 Feb 2012 09:13:55 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Saugata Mittra http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/comment-page-1/#comment-12183 Saugata Mittra Fri, 03 Dec 2010 21:35:44 +0000 http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/#comment-12183 1) Variable resource: labor is the only variable resource that can be changed in the fixed plant period. 2) Variable plant period: a firm can change all of its variables of production to either increase output or decrease output. This is why the long-run is called the variable plant period, because firms even have the opportunity to vary their amount of "plants" or factories. 3) The law of diminishing marginal returns states that the more of a variable resource you add to a fixed amount of capital or land, after a certain point, the productivity of the variable resource will drop, increasing costs for the firm. Especially if a plant is closed down, the workers of that plant should be laid off to prevent additional costs being accumulated by the firm. 1) Variable resource: labor is the only variable resource that can be changed in the fixed plant period.

2) Variable plant period: a firm can change all of its variables of production to either increase output or decrease output. This is why the long-run is called the variable plant period, because firms even have the opportunity to vary their amount of "plants" or factories.

3) The law of diminishing marginal returns states that the more of a variable resource you add to a fixed amount of capital or land, after a certain point, the productivity of the variable resource will drop, increasing costs for the firm. Especially if a plant is closed down, the workers of that plant should be laid off to prevent additional costs being accumulated by the firm.

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]]> By: Zac Query http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/comment-page-1/#comment-7123 Zac Query Thu, 11 Dec 2008 03:26:31 +0000 http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/#comment-7123 My stomach turned this evening as I watched a "debate" on FOXNews as to whether the auto companies should receive a bailout or not. One gentleman in favor of such a bailout supported his case by stating that The Big Three have made improvements over the last few years and they have some good vehicles in the marketplace. I won't waste any time debating that point but I'll get to the "meat" of what is really happening. It's irrelevant whether any one or all of The Big Three have good cars in the marketplace. What matters is how well they can run their businesses and are they able to stay financially healthy throughout all types of business cycles. The answer for The Big Three in this case is very obvious - NOT TOO GOOD. It seems that management and the unions deserve one another. Over the years, management has chosen to be reactive to their competitors and to the trends in the market. The unions have chosen to be self-serving, seeking only what they can get for themselves. Well, the consequences of their actions are coming home to roost. A bailout is only going to treat the symptoms and not cure the underlying illness. My stomach turned this evening as I watched a "debate" on FOXNews as to whether the auto companies should receive a bailout or not. One gentleman in favor of such a bailout supported his case by stating that The Big Three have made improvements over the last few years and they have some good vehicles in the marketplace. I won't waste any time debating that point but I'll get to the "meat" of what is really happening. It's irrelevant whether any one or all of The Big Three have good cars in the marketplace. What matters is how well they can run their businesses and are they able to stay financially healthy throughout all types of business cycles. The answer for The Big Three in this case is very obvious – NOT TOO GOOD. It seems that management and the unions deserve one another. Over the years, management has chosen to be reactive to their competitors and to the trends in the market. The unions have chosen to be self-serving, seeking only what they can get for themselves. Well, the consequences of their actions are coming home to roost. A bailout is only going to treat the symptoms and not cure the underlying illness.

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]]> By: Jason Welker http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/comment-page-1/#comment-7025 Jason Welker Wed, 03 Dec 2008 15:38:31 +0000 http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/#comment-7025 Amen to that Shahir! Personal choices are so important and chosing to enter the rat race has its own risks. Then again, even those who chose a simpler path can find themselves in extreme hardship at times of recession today. Sadly, the Americans likely to be MOSt hurt by the recession are those whose incomes and access to health care were worst before the whole mess started. I won't be shedding any tears for the CEO who earns 1 dollar next year and has to say bye to his corporate jet... but the 10s of millions of Americans who will LOSE their health care, that's the real tragedy. Hopefully the Obama administration can make the right decisions, invest in healthcare and education, put people to work who will become unemployed from the downsizing of the auto and other industries. Then again, to save these firms despite their failures to remain competitive is clearly the wrong solution. Thanks for your comment! Amen to that Shahir! Personal choices are so important and chosing to enter the rat race has its own risks. Then again, even those who chose a simpler path can find themselves in extreme hardship at times of recession today. Sadly, the Americans likely to be MOSt hurt by the recession are those whose incomes and access to health care were worst before the whole mess started. I won't be shedding any tears for the CEO who earns 1 dollar next year and has to say bye to his corporate jet… but the 10s of millions of Americans who will LOSE their health care, that's the real tragedy. Hopefully the Obama administration can make the right decisions, invest in healthcare and education, put people to work who will become unemployed from the downsizing of the auto and other industries. Then again, to save these firms despite their failures to remain competitive is clearly the wrong solution. Thanks for your comment!

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]]> By: Shahir Ahmed http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/comment-page-1/#comment-7023 Shahir Ahmed Wed, 03 Dec 2008 11:57:22 +0000 http://welkerswikinomics.com/blog/2008/12/03/american-auto-makers-insult-the-inteligence-of-high-school-econ-students/#comment-7023 Maximze profits. CEO's giving up salaries and corporate jets may seem funny at a level that can't earn it but the philosophy beyond loving and living in a capatilstic society is what still pays the big bills. As ironic as it is , all those american kids you teach in private schools are there because either their dad or mom was chasing the dollar. Some people just end up in a position chasing more. The real economic lesson should be, you don't have to do the same thing as your parents did to have a better life. Maximze profits. CEO's giving up salaries and corporate jets may seem funny at a level that can't earn it but the philosophy beyond loving and living in a capatilstic society is what still pays the big bills. As ironic as it is , all those american kids you teach in private schools are there because either their dad or mom was chasing the dollar. Some people just end up in a position chasing more. The real economic lesson should be, you don't have to do the same thing as your parents did to have a better life.

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