Transcript Agenda: Monday, 4/16

Agenda:
Monday, 4/16
• Test Review:
– Graph the MI minimum wage
• Natural monopoly & Economy of Scale
• Test Review: Graph practice, terms/ concepts…
Minimum Wage
Costs
–
–
–
–
Benefits
Less workers employed
•Higher wage for employed
Business expenses rise
unskilled, entry-level workers
Less hours for workers
Workers advance
slower
– Harder to get a job
– Shortage of jobs
– Greater unemployment
– Inflation of prices
Purpose of raising minimum wage: Raise the standard of
living of the poor. Did it work? Who actually benefits?
Monopoly & Economy of Scale
Unrestricted
monopoly is bad for
consumers & competition!
 Allowed
when best for consumers—
Natural Monopoly (then a Gov. Monopoly)
When
is a monopoly good?
Economies
of scale—p. 157 review
–This determines the market structure of an
industry! Diminishing Returns—apply?
–http://apecon.us/naturalmonopoly.gif
Economy of scale & Natural Monopoly
• Economy of scale operates differently than a normal
business—more output =more efficiency opposite of helicopter
simulation
• EOS examples: Power plant, land line phones, cable TV…
• Therefore, governments sometimes step in and allow natural
monopolies to develop for economies of scale then regulate
Normal business (No EOS)
Cost
Economy of scale
Cost
Output (law of dim returns) Output (DMR not applicable)
Market: Diamonds
• Factor # 1: new technology emerges to
make diamond mining more efficient
• Factor # 2: popular documentary shows
the enslavement of diamond miners
1.Construct a market graph and draw the
appropriate shifts in Supply & Demand
2.Explain what happens to price &
quantity?
Market: hamburgers
• Factor # 1: Price of corn used for feed drops
• Factor # 2: Reputable new study shows beef is
now healthy for you—refuting earlier studies
1. Construct a market graph and draw the
appropriate shifts in Supply & Demand
2. Explain what happens to price & quantity?