Tuesday, February 16, 2010

The Costs of Production

OBJECTIVES 

Students shall be able to

  1. define economic cost,

  2. define explicit cost and implicit cost,

  3. differentiate between explicit and implicit costs,

  4. define normal profit and economic profit,

  5. identify levels of economic profit,

  6. define long run and short run,

  7. define marginal cost, average cost, and total cost,

  8. differentiate among marginal cost, average cost, and total cost,

  9. identify the relationship among marginal cost, average cost, and total cost,

  10. define increasing, diminishing, and negative marginal returns,

  11. identify graphically increasing, diminishing, and negative marginal returns from both marginal product and total product curves,

  12. define fixed cost, variable cost, and total cost,

  13. differentiate among fixed cost, variable cost, and total cost,

  14. identify graphically fixed cost, variable cost, and total cost,

  15. identify graphically the relationship between product and cost curves,

  16. explain the relationship between short run and long run total cost curves,

  17. define economies of scale, constant returns to scale, and diseconomies of scale,

  18. differentiate among economies of scale, constant returns to scale, and diseconomies of scale,

  19. identify graphically economies of scale, constant returns to scale, and diseconomies of scale,

  20. define minimum efficient scale,

  21. identify graphically minimum efficient scale,

  22. define natural monopoly, and

  23. identify graphically a natural monopoly.

ACTIVITIES

  1. Students shall watch "Economics USA: The Firm" and answer questions.

  2. Answering student questions.

  3. Discuss key points.

Assignments:

  1. Take part in the discussion.

  2. Read M&B chapter 23 on Pure Competition.

Please note: This is the most difficult chapter in the book. The authors are laying the groundwork for developing an understanding the decision-making in the various types of market structures. The information presented here is therefore foundational for understanding the material in the next several chapters. And this "theory of the firm" is the largest portion of the A.P. Microeconomics test.

 

ASSESSMENT PROCEDURES

Monitor and adjust as necessary. Grade the questions from the video.