ECON 1051 1nd Edition Lecture 27 Outline of Last Lecture I. Excel Worksheet II. EquationsOutline of Current Lecture I. Technological Changes II. Implicit vs. Explicit III. EquationsIV. Economies of ScaleV. The Four Market StructuresCurrent LectureI. Technological Changes a. Technological Changes in America: Starting Model T and Driving Video i. How Ford re-invented the idea of the average work week to maximize productivityb. Short run i. Can’t change the way something is producedc. Long run i. Can change the way something is produced ii. Long-run average cost curve1. A curve that shows that lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixedII. Implicit vs. Explicit a. Economic depreciationi. The difference between the amount paid for capital at the beginning of the year and the amount it could be sold for at the end of the year b. Marginal product of labori. The additional output a firm produces as a result of hiring one more workerc. Law of diminishing returnsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.i. The principle that at some point, adding more of the variable input, such as labor, to the same amount of a fixed input, such as capital, will cause the marginal product of the variable input to declineIII. Equations: a. ATC = TC/Q b. AFC = FC/Q c. AVC = VC/Q IV. Economies of Scale a. Economies of scalei. The situation when a firms long-run average costs fall as it increases the quantity of output it produces b. Constant returns to the scalei. The situation in which a firm’s long-run average costs remain unchanged as increases outputc. Minimum efficient scalei. The level of output at which all economies of scale are exhaustedd. Diseconomies of scalei. The situation in which a firms long-run average costs rise as the firm increase output V. The Four Market Structures a. Perfect competitioni. Ideal world = many buyers and sellersii. Easy to doiii. Buy what’s cheaper because of lots of competitionb. Monopolistic competitioni. All Journalism graduates from Mizzou have the same degree but which one is better? ii. Examples: 1. Etsya. Same firms but differentiated products 2. Clothing storesc. Oligopoly i. Few firms because it’s hard to get in toii. Few choices iii. Examples:1. Cars2. Manufacturing computers3. Airlines d. Monopoly i. One, unique, entry blockedii. Examples:1. First-class mail delivery2. Tap
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