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| | On a personal level, it is usually impossible to do two things at once. Either you spend the next hour working on this course, or you spend it doing something else. You could graph a production possibility curve for how you spend 24 hours each day. It could be 8 hours sleeping, 1 hour exercising, 1 hour traveling to destinations, 3 hours cooking and eating, 6 hours studying, 1 hour relaxing, and 4 hours working at a job. If you take an hour away from one activity, then you can add it to another. Your production possibility curve would represent all the possibilities. | | On a personal level, it is usually impossible to do two things at once. Either you spend the next hour working on this course, or you spend it doing something else. You could graph a production possibility curve for how you spend 24 hours each day. It could be 8 hours sleeping, 1 hour exercising, 1 hour traveling to destinations, 3 hours cooking and eating, 6 hours studying, 1 hour relaxing, and 4 hours working at a job. If you take an hour away from one activity, then you can add it to another. Your production possibility curve would represent all the possibilities. |
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| − | == Review: == | + | == Review: Cost Measures== |
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| | + | Consider Figure B to the right. <> |
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| | == The Law of Comparative Advantage == | | == The Law of Comparative Advantage == |
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| | 6. Suppose you manage a monopoly, and want to know the short-run and long-run conditions for shutting down. Explain them in terms of average variable cost (AVC), average total cost (ATC) and price (P). | | 6. Suppose you manage a monopoly, and want to know the short-run and long-run conditions for shutting down. Explain them in terms of average variable cost (AVC), average total cost (ATC) and price (P). |
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| | ===Honors:=== | | ===Honors:=== |
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| | Answer 3 out of 4 questions below: | | Answer 3 out of 4 questions below: |
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| − | 10. Look again at Figure C in the lecture (the first one). Assuming it represents the long run, describe what type of industry this is (e.g., monopoly, oligopoly, monopolistic competition, or perfect competition). Explain your answer. | + | 10. Look again at Figure C in the lecture (the first one). At what point is total revenue maximized? |
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| | 11. Explain why the production possibilities curve is convex (opening downward like the top of a circle) rather than concave (opening upward like the inside of a bowl) or a straight line. | | 11. Explain why the production possibilities curve is convex (opening downward like the top of a circle) rather than concave (opening upward like the inside of a bowl) or a straight line. |
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| − | Fix: Sharon has to pay $10.50 to hire nine workers, and must increase the wage to $11 to hire a tenth worker. But the tenth worker will bring in $13 extra to the firm’s revenue. Does Sharon hire the tenth worker?
| + | 12. Suppose you are a monopsony, and you must pay $9 to hire nine workers, but in order to hire one more worker you must pay $10. The tenth worker will bring in $15 extra per hour to the firm’s revenue. Does you hire the tenth worker? |
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| − | 9. If our class is a monopsony with respect to hiring a dinner speaker for a special homeschool dinner we might hold, can we set the fee at whatever we like? If not, why not?
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| − | 10. Explain: when consumer demand (demand for output) is more elastic, then demand for labor by a company tends to be more elastic.
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| − | 11. Imagine yourself as a powerful regulator who can set the price of a certain good in a certain industry wherever you want. Suppose that in the free market, competitive equilibrium would have price “P”. Where would you set the price if you diabolically wanted to cause a shortage of goods? Where would you set it if you diabolically wanted to cause a surplus of goods? Explain.
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| | + | 13. In the term "comparative advantage," to what does the adjective "comparative" refer? What is the term "comparing"? Explain. |
| | [[Category:Economics lectures]] | | [[Category:Economics lectures]] |
| | {{DEFAULTSORT: Economics Lecture 11}} | | {{DEFAULTSORT: Economics Lecture 11}} |