4.1. Back to Black Dog

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Из курса от партнера University of Illinois at Urbana-Champaign

Microeconomics Principles

615 оценки

University of Illinois at Urbana-Champaign

Microeconomics Principles

615 оценки

This course offers an introduction to the functions of individual decision-makers—both consumers and producers—within the larger economic system. Emphasis is on the nature and functions of product markets, the theory of the firm under varying conditions of competition and monopoly, and the role of government in promoting efficiency in the economy. Most people make the incorrect assumption that economics is ONLY the study of money. My primary goal in this course is to shatter this belief. During this course, we will be addressing the above questions as well as many more relating to: -the environment -love and marriage -crime -labor markets -education -politics -sports -business My main goal is to show you the way economists think and how to use this analytical system to answer questions related not only to these and other important human issues, but to anything you end up doing with your life after this class. After all, as you will quickly find out, I believe that everything is economics!

Из урока

Production and Costs

Welcome to your fifth week! This module we will begin covering the theory of the firm, which will take us basically three modules to finish. Economists call this section of the course, "The Economics of the Lemonade Stand." And that title makes perfect sense, since the concepts we cover can be used by anyone, from someone owning a lemonade stand, to a car manufacturing company, to a hair salon, to a burrito stand, etc.

4.1. Back to Black Dog4:20

4.2. Applications9:58

Познакомьтесь с преподавателями

Dr. José J. Vázquez-Cognet
Clinical Professor
Department of Economics

[music] >> Very well. So, this week, we have actually finished

the first part of firm theory, now we, we, I guess we're going to do three weeks on

it, but the first of the two big parts we're going to start this week and we're

going to finish next week. Now, in order to give you like kind of a

conclusion to this week, and which will be kind of introduction to next week, I want

you to hear from Mike as to one of the issues he'd be having, recently

particularly a good issue because he's had so much success in his business.

So, let's hear what, what the issue is, and then let's come back here and see how

that, it relates to what we did this, this week and what we're going to do next week.

>> Because of the situation we're in, which is that we own the building and we

have a zero lot line on the building, we can't expand this building at all unless

the property owners next door to us are willing to sell.

We never thought that property would change hands, but it did change hands from

somebody that never sells to somehow they sold the property to somebody that is

apparently not going to sell either. So, we're looking at a situation where we

need to open a second location and that would give us more space.

Our kitchen isn't set up well in the back for what, the amount that we have to do.

So, one of the biggest things is that we need to set up a kitchen that's a little

better than the one we have. And then also, more seats for the

customers would be nice. And we'd also like to do an outdoor area.

And we see people coming up and walk, walking up to the door looking at the

line, and walking away every day. And we have a line every day.

So we also think that in Champaign, there's a little bit more, more of a

market for us. We'd probably have more people coming to

us if we had the right location in Champaign.

>> Very well. So, you see that one of the difficult

issues that Mike has to deal with them, it's a good issue, is that he's been

having so much success that he's considering whether to expand, right, and

he's looking for places and he's trying to figure out how that would be a good thing,

and, and so much and so forth. Now, can we answer that question with just

what we said? Well, we can answer part of that.

Now, we know that the reason he wants to expand, is because he's running out of

space in the kitchen, because he's run into that diminishing marginal return

problem of having too many cooks in the kitchen, that any business will run into

when you actually try, in, continue to increase your operation when some, when

some got some fix. So, we understood, we understand that now

after we're done this week. We also understand, after talking about

cost this week, that since we've run into that diminishing marginal return problem,

his, if, he, he would like, like to add another cook, but that cook would add his

cost dramatically so it doesn't make sense for him to add that cook.

We understand the problem of having a fixed kitchen to your cost.

What we're going to talk about next week is the other side of the equation.

So, Mike needs to know also how much he charge and, and what is the revenue he

makes in order to decide whether to expand or not.

And how do they make decisions about how to expand?

You see, what is the criteria he uses as to whether he should build more space for

his kitchen or not. It's not only cost, it also has to do with

customers and how many customers he would be able to sell, and how much he's going

to charge for his product, and what type of product he has in relation to his

competitors. So, those are the questions we still we

have to answer in order to, to answer Mike's, Mike's question.

And in particularly, what does Mike's wants to do, right?

Is, is he want to just does he care about other things, that just the bottom line,

right? So, we have to answer those questions

before we can actually advise Mike as to what to do or to whether he should expand

his business or not. So, next week, we'll talk about the other

side of the equation which is the revenue side.

And then, we put the revenue with the costs together to understand how, how

companies make profit decisions. That's what we'll do, next week, we'll

continue to use the same example, and then, hopefully, at that time, you're in a

better position to advise not only Mike, yourself or anyone doing, business or

being a manager of a company. [music] Produced by OCE, Atlas Digital

Media at the University of Illinois, Urbana-Champaign.

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