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Economics 10

Measure of Costs. Fixed cost

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Economics 10

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    1. Economics 10/11/04 www.msu.edu/~milewsk6 OBJECTIVE: Complete examination of the theory of production. I. Journal #24 pt.A -Read “The Global Economy” p.130 -Answer questions (1-2) p.130 II. Journal #24 pt.B -notes on the theory of production. III. Homework Due Friday 10/15/04 1.) Read Chapter #5 section #3 p.(127-131) -Answer questions (3-6) p.131 2.) Read Chapter #6 section #1 p.136-140 -Answer questions (3-6) p.140

    2. Measure of Costs Fixed cost – the cost that a business incurs even if the plant is idle and production is zero -salaries to executives -interest on bonds -rent payments -taxes -depreciation Overhead – total fixed cost

    3. Variable costs – costs that change when output changes -hourly workers -power -freight charges -raw materials Total costs – the sum of fixed and variable costs

    4. Marginal Costs & Profits

    5. Economics 10/12/04 www.msu.edu/~milewsk6 OBJECTIVE: Examine price as signals. I. Journal #25 pt.A -Questions on NBR segments 5 & 6 (video) II. Administrative Stuff -coats & stunt doubles III. Journal #25 pt.B -notes on prices IV. Homework Due Friday 10/15/04 1.) Read Chapter #5 section #3 p.(127-131) -Answer questions (3-6) p.131 2.) Read Chapter #6 section #1 p.136-140 -Answer questions (3-6) p.140

    6. NBR – segments 5 & 6 1.) Why did people flock to Mercedes dealerships in 1998? 2.) Why did farmers adjust their milk production following the holiday season of 1998? 3.) Why did Kodak cut jobs in 1999? 4.) What does leaner & meaner mean? BBC

    7. Prices as Signals Price – the monetary value of a product as established by supply and demand. Price is a signal that helps us make economic decisions. High prices are a signal for producers to produce more and consumers to buy less. Low prices are a signal for producers to produce less and consumers to buy more.

    8. Advantages of Prices 1.) Prices in a competitive market favor neither the producer nor the consumer 2.) Prices in a market economy are flexible. 3.) Prices have no administrative costs and answer the question WHAT, HOW, and for WHOM to produce. 4.) You have known it your entire life!

    9. How is price determined? Price is determined by the intersection of the supply and demand curves.

    10. Life without prices? Prices help allocate scarce resources, but what if there was no such thing as price? Rationing – the government determines everyone’s “fair” share. Problem with determining what is fair High administrative stuff No incentive to work hard

    11. Economics 10/13/04 www.msu.edu/~milewsk6 OBJECTIVE: Complete examination of the theory of production. I. Economics U.S.A. episode #16 -watch Econ U.S.A. (video) -Answer questions on the video worksheet II. Guided Readings (worksheet) -complete the guided reading worksheet on: - Chapter#5 section #3 & Chapter#6 section#1. III. Homework Due Friday 10/15/04 1.) Read Chapter #5 section #3 p.(127-131) -Answer questions (3-6) p.131 2.) Read Chapter #6 section #1 p.136-140 -Answer questions (3-6) p.140

    12. Economics 10/14/04 www.msu.edu/~milewsk6 OBJECTIVE: Complete examination of the theory of production. I. Journal #26 -Read “Profiles in Economics” p.141 -Answer question #1 p.141 (the cost of kids) II. Economics Laboratory - Supply -worksheets on supply. III. Homework Due Friday 10/15/04 1.) Read Chapter #5 section #3 p.(127-131) -Answer questions (3-6) p.131 2.) Read Chapter #6 section #1 p.136-140 -Answer questions (3-6) p.140

    13. Economics 10/15/04 www.msu.edu/~milewsk6 OBJECTIVE: Examine current events in the realm of economics. I. Journal #27 The following readings are from: The Wall Street Journal Classroom Edition -Read “Heartstrings and Purse Strings” p.14 -Read “The Barbell Effect” p.21 -Read and summarize one article of your choice. II. Economics Laboratory - Supply -review worksheets on supply.

    14. This is slide #14 and the last one for the week. Next week we will complete our look at prices and begin to prepare for the Chapter #5 & 6 Test. Have a nice weekend ?

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