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| | The key to increasing returns to scale, which is what every firm owner wants, is '''''division of labor'''''. Train your employees to become specialists at certain functions so that they can be performed more efficiently. Henry Ford was a master at this, training his workforce in a way that each employee was an expert at a particularized aspect of the assembly line. The more specialized employees can become, the faster they can accomplish their task. After a while, they can almost do their job in their sleep. And that is a good thing, because doing the same task over and over puts one to sleep! | | The key to increasing returns to scale, which is what every firm owner wants, is '''''division of labor'''''. Train your employees to become specialists at certain functions so that they can be performed more efficiently. Henry Ford was a master at this, training his workforce in a way that each employee was an expert at a particularized aspect of the assembly line. The more specialized employees can become, the faster they can accomplish their task. After a while, they can almost do their job in their sleep. And that is a good thing, because doing the same task over and over puts one to sleep! |
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| − | Charlie Chaplin mocked this division of labor in the mostly silent movie, “Modern Times,” made in 1936. In it he portrays a factory working toiling in a dehumanizing position under the pressure of a mean boss. Charlie is just trying to earn a decent living and buy a house for his wife Paulette and himself, but bad luck keeps getting the way. The theme of class struggle occurs repeatedly in politics to this day. In 1988, Democratic presidential candidate Michael Dukakis emphasized the need for Americans to have good jobs, not just any job. But Dukakis was unsuccessful with his promise; either not enough believed him, or not enough cared because the economy was doing well at the time. | + | Charlie Chaplin mocked this division of labor in the mostly silent movie, “Modern Times,” made in 1936. In it he portrays a factory working toiling in a dehumanizing position under the pressure of a mean boss. Charlie is just trying to earn a decent living and buy a house for his wife Paulette and himself, but bad luck keeps getting the way. The theme of class struggle occurs repeatedly in politics to this day. |
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| | ==Costs: Long Run Is Cheaper than Short Run== | | ==Costs: Long Run Is Cheaper than Short Run== |
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| | 2. The Lecture mentioned how a prior student in this course is paying her way through college by working as a waitress in a fancy Manhattan restaurant. Suppose her boss told her one day, "We were profitable last month. To increase our profits next month, I'm going to double our number of waitresses so that we can serve more people!" But our former economics student told him that his plan would fail because there is _____________ returns of scale in the restaurant, because more waitresses would result in more wasted time talking to each other and waitresses getting in the way of each other. | | 2. The Lecture mentioned how a prior student in this course is paying her way through college by working as a waitress in a fancy Manhattan restaurant. Suppose her boss told her one day, "We were profitable last month. To increase our profits next month, I'm going to double our number of waitresses so that we can serve more people!" But our former economics student told him that his plan would fail because there is _____________ returns of scale in the restaurant, because more waitresses would result in more wasted time talking to each other and waitresses getting in the way of each other. |
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| − | 3. Give an example of a "short run" cost for a firm, and give an example of a "long run" cost. This can refer to any type of firm, from a grocery store to a baseball team to a homeschool. | + | 3. Give an example of a "short run" cost for a firm, and give an example of a "long run" cost. This can refer to any type of firm, from a grocery store to a baseball team to homeschooling. |
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| | 4. Suppose you own a mechanics' shop that fixes cars, and you have 4 employees whom you pay $12 per hour. On average your 4th employee can fix 3 cars an hour. What is your marginal product (MP) and marginal cost (MC), and what is the minimum on average that you need to charge customers (your marginal revenue) for fixing cars? (Assume your only cost is labor, and the customer pays the cost of any parts.) | | 4. Suppose you own a mechanics' shop that fixes cars, and you have 4 employees whom you pay $12 per hour. On average your 4th employee can fix 3 cars an hour. What is your marginal product (MP) and marginal cost (MC), and what is the minimum on average that you need to charge customers (your marginal revenue) for fixing cars? (Assume your only cost is labor, and the customer pays the cost of any parts.) |