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ECO202 Principles of Microeconomics
Module 1 Discussion
After watching the video clip from Jingle All the Way, consider the following:
Prices serve a rationing function. When quantity demanded exceeds quantity supplied, prices rise to alleviate the shortage. When quantity supplied exceeds quantity demanded, prices fall to alleviate the surplus. However, when prices are inflexible, shortages and surpluses persist. Other rationing mechanisms must develop.
Using demand and supply analysis, describe a specific situation where a shortage occurred. Why were prices unable to adjust in this market?
Combining what you learned from your readings as well as from the video clip, what other rationing functions could develop to alleviate the shortage?
ECO202 Principles of Microeconomics
Module 2 Discussion
After viewing the video clip, Bart Gets an Elephant, consider the relationship between price elasticity of demand and total revenue, and why Homer didn’t make the smartest business decision when raising the price of admission. For this week’s discussion question, you should pick two products: one that is relatively price inelastic and another that is relatively price elastic. You can determine a product’s relative price elasticity by considering the Determinants of the Price Elasticity of Demand listed in your textbook. You should begin by defining your product in terms of the determinants and then describe how increases in the price would affect total revenue. Would it make good business sense to be the one producing and selling these products? Why or why not?
ECO202 Principles of Microeconomics
Module 3 Discussion
After viewing the video clip from Cool Hand Luke, first consider how marginal benefits and marginal costs fit in to Luke’s decision, and how the concept of diminishing marginal utility is at work as Luke eats more and more eggs.
What is driving his marginal benefits to continue to exceed his marginal cost?
Consider how Luke’s decision would change if he had to actually pay for each egg he eats. How would this affect his choice to continue eating?
Consider the concept of marginal utility per dollar spent (i.e. MU/p) and how it affects the consumption decisions we make. Have you ever had a time where you actually bought your second choice rather than your first choice? That is, can you think of a time where it wasn’t only about marginal utility for you, but about marginal utility per dollar spent? Explain.
ECO202 Principles of Microeconomics
Module 4 Discussion
After viewing the clip “Broke“ from The Office, what was Ryan referring to when he said, “Over time with enough volume, we become profitable.” What short run costs was he focused on, and what was he ignoring?
Given what you have learned so far about economies and diseconomies of scale, discuss the ramifications involved as a firm grows bigger. Use examples from beyond your readings to describe firms experiencing either economies or diseconomies of scale and what this implies for competition and for the customers of these firms.
ECO202 Principles of Microeconomics
Module 5 Discussion
Search the web and view the video clip 1,000 Flowers Auctioned per Second in Holland. Then, research the Aalsmeerflower auctions in more detail.
What aspects of perfect competition do you see present in the Aalsmeer flower auctions? Since there is no truly perfectly competitive market in the world, but rather markets that approach this extreme, are there any elements of the Aalsmeer flower auction that you find do not fit the model of perfect competition?
Describe another industry that you find fits the model of perfect competition.
ECO202 Principles of Microeconomics
Module 6 Discussion
After watching the video clip from Forrest Gump, consider that Forrest’s good luck of “being in the right place at the right time” allowed him to operate as a monopoly. Typically, the fishing industry is a highly competitive industry where economic profits are rarely made in the long run. However, in a twist of fate, Forrest’s boat is the lone survivor after a hurricane washes ashore and destroys all the other shrimp boats.
Consider the barriers to entry facing potential competitors in Forrest’s monopoly market. The more contestable a market, the closer it will be to a perfectly competitive market, whereas the less contestable a market, the closer it will be to a monopoly.
What barriers to entry exist in other industries that allow certain firms to operate as a monopoly? Are these barriers contestable?
ECO202 Principles of Microeconomics
Module 7 Discussion
Search the web and view the video clip Golden Balls – £100,000 Split Or Steal? 14/03/08.
After watching the video clip, answer the following questions:
How does the Prisoners’ Dilemma apply in the game of Golden Balls?
Is the Prisoner’s Dilemma entirely applicable in this game? Why or why not?
What would you do if you were playing this game? Explain your reasoning.
ECO202 Principles of Microeconomics
Module 8 Discussion
After watching the video clip from The Corporation, consider that labor is a derived demand. What forces are at work demanding low-skilled labor in the developing world? What could a country do to improve the types of skills demanded of its labor?
