Archive for the 'Perfect competition' Category

Nov 15 2010

Diminishing returns and the short-run costs of production – “Econ Concepts in 60 Seconds”

YouTube – Econ Concepts in 60 Seconds: The Law of Diminishing Marginal Returns

Mr. Clifford, an AP Economics teacher from San Diego, demonstrates the law of diminishing returns by deriving a total product and marginal product curve using production data from a student’s lawn mowing business.

Econ Concepts in 60 Seconds: The Law of Diminishing Marginal Returns The video above is most useful to Econ students because it enforces the Law of Diminishing Returns. The more important application of this basic economic concept, however, is the short-run per-unit cost curve, Marginal Cost, Average Variable Cost and Average Total Cost. Mr. Clifford offers his quick explanation of the relationships between a firm’s short-run costs in the following video.

Econ Concepts in 60 Seconds: Per Unit Costs Curves

Discussion Questions:

  1. Mr. Clifford derives a Marginal Product Curve in the first video and a Marginal Cost Curve in the second video. What is the relationship between the marginal product of a firm’s variable resource and the firm’s marginal cost of production? How are the shapes of both these curves determined by the law of diminishing marginal returns?
  2. Why does a firm care about its costs of production? Which of the four per-unit cost curves in the second video would a firm be most concerned with when determining whether or not it is earning profits or losses?
  3. What can cause a firm’s cost curves to shift up or down? How would a shift of the cost curves affect a firm’s profits?
  4. What is the primary economic goal of firms, and how can understanding their short-run costs of production help them achieve this goal?

21 responses so far

Dec 02 2009

Review Lesson: Econ concepts in 60 seconds – Perfect Competition

YouTube – ACDCLeadership’s Channel

More econ review videos from my new favorite YouTube channel, Jacob Clifford’s Econ Concepts in 60 Seconds.

To review for the upcoming test, you will join a small group and watch one of the four videos on the Perfect Competition. After watching and discussing one video with your group, you will be re-assigned to another group with students who watched a different video. You will then lead a short discussion on your original video with your new group.

With your first group – 15 minutes: As your group watches its assigned video, have your notes open in front of you and draw the graphs Mr. Clifford draws along with him. Pause the video where necessary to have time to draw graphs. Take notes while watching the video so you can teach it to another group. With your group, prepare a short discussion of the video’s main points, including:

  • What rule or lesson about Perfect Competition does the video focus on?
  • What did you already know that this video reminded you of or reinforced your understanding of?
  • What did this video introduce that was new to you?
  • How were graphs used to teach the concepts?

With your second group – 20 minutes: For the second part of this assignment, there should be four new groups, each including one member of the four original groups.

  • Each group member should lead a 2-3 minute discussion of the video he or she watched in the first group.
  • Go over each of the discussion points from above.
  • Answer any questions your new group members have about video you watched.

Group 1 – The Profit Maximization Rule – MR=MC:

[youtube]http://www.youtube.com/watch?v=qaQRM6WIxpA[/youtube]

Group 2 – Perfect Competition in the short-run:

[youtube]http://www.youtube.com/watch?v=yY8f571AUxk[/youtube]

Group 3 – Perfect Competition in the long-run:

[youtube]http://www.youtube.com/watch?v=SjZmnOAPKUM[/youtube]

Group 4 – The Shut-Down Rule in Perfect Competition:

[youtube]http://www.youtube.com/watch?v=VFY2aJwpdNM[/youtube]h

11 responses so far

Jan 18 2009

Competition and rising costs force Southwestern farmers to consider alternatives

NPR : Farmers May Switch Crops Due to Labor Shortage

Pure competition forces firms to produce their output in the most efficient manner. Productive efficiency is achieved when producers achieve their minimum average total cost. Any increase in costs may lead to economic losses for a firm, and if costs increase too much a firm may be forced to shut down.

The scenario above is basically a textbook explanation of the reality faced by farmers in the American Southwest this very day. Hundreds of fruit and vegetable farmers are facing higher variable costs as tougher border security and immigration laws has led to a shortage of cheap labor, which the farmers depend on in the labor-intensive fruit and vegetable industry.

Listen to the podcast above, then study the graphs that accompany this article.

Rising costs for in a perfectly-competitive (PC) industry: Click on the thumbnails of the graphs to see the full-sized versions

economic profitEconomic lossesShut down scenario

Discussion Questions:

  1. What changes have occurred in the American fruit and vegetable industry?
  2. What are the possible outcomes for Southwest farmers?
  3. How might technology help save these growers from having to shut down their operations?
  4. What other alternatives do they have to shutting down in the long run?

181 responses so far

Nov 12 2007

SAS Economists Podcast #8 – Shanghai’s fake DVD market

by Alice Su and Jessica Ng

Is it true what they say about the DVD market in China? Can you really buy fake DVDs on the streets for ONE DOLLAR? Come on, that’s a bit extreme, isn’t it? In fact, it’s not just under bridges and in dark alleys where you can buy pirated DVDs in Shanghai, but in respectable shops all over the city that on the outside and in look just like a legitimate DVD shop in the states or Europe.

This podcast will explore the economic characteristics of the market for fake DVDs in Shanghai and determine what it would take for the makers of real DVDs to be able to compete with the well established market for fakes.

[youtube fJkpvaU9izk]

9 responses so far

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