Watch the following videos which will give you an introduction to some of the main concepts for this module. Pay special attention to the discussion about fixed versus variable costs and accounting versus economic profit:
Clifford, J., & Hill. J. (2016). Revenues, profits, and price. CrashCourse. https://www.youtube.com/watch?v=UWImfFax8Ew
The following book will give you a relatively simple introduction to the key concepts covered in the module. In addition to the concepts, make sure to go carefully through the numerical examples. Read Chapter 7 of the following book (use the “Contents” tab to navigate though Sections 7.1, 7.2., and 7.3):
Taylor, T. (2014) Principles of Microeconomics. OpenStax College. http://cnx.org/contents/[email protected]:75YRzeYw@8/Introduction-to-Cost-and-Indus
Now go to this slightly more advanced book chapter that will cover the concepts from this module from the point of view of a business manager. Pay special attention to the tables and numerical examples:
Marburger, D. R., & Peterson, R. (2013). Chapter 4: What your cost accountant can’t measure: The economic theory of production and costs. Economic Decision Making Using Cost Data: A Manager’s Guide. New York, NY: Business Expert Press. [EBSCO eBook Collection. Note: to find the book enter only the title of the book in the library search engine]
Assignment Overview
Before beginning this assignment, make sure you have gone carefully through all of the required readings for this module. It is very important to carefully absorb both the general concepts as well as the numerical examples in the background readings. For this assignment, you will have to answer some purely conceptual questions as well as some numerical problems. For conceptual questions, make sure to thoroughly explain your answers and to cite specific readings from the required background materials to explain your answers. For numerical problems, make sure to show all of your work and explain how you arrived at your answers (partial credit can be given if you get the final answer wrong but do some of the steps correctly). Note that you need to use Microsoft Excel to do the graphs for the numerical problems. Do some research on fixed versus variable costs and accounting versus economic profit, and write a five-page paper answering the following questions:
Case Assignment:
3
450
4
630
110
5.
630
6.
110
• Complete this table.
• Draw the graphs of the marginal product (MP) and the average product (AP).
• Where do the AP and MP curve cross?
The cost of 1 worker is $2000 per month. Total fixed cost is $4000 per month.
• For this discussion, we will be looking at interactive tutorials or quizzes that might help you and your classmates with any concepts or calculations that you are having difficulty with If you are having difficulty with the numerical calculations covered in this module, try this interactive tutorial: Baker, Samuel L. (2013), Economics Interactive Tutorial. http://www.sambaker.com/econ/cost/cost.html
• Economics tutorials by Samuel L. Baker are licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
• Search the web and try to find at least one other tutorial on production costs (marginal costs, variable costs, total costs, etc.) that you find useful for this module. This could be a tutorial, a video lesson, an online practice quiz, etc. Share the link with your classmates and explain what you found useful about it. As a follow-up to your first post, try using one of the tutorials that your classmates found and share your thoughts.