ECO202 MODULE 1 TO MODULE 4 DISCUSSIONS

SAINT ECO202 MODULE 1 TO MODULE 4 DISCUSSIONS

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?

Module 2 Discussion

After viewing the video clipBart Gets an Elephant, consider the relationship between price elasticity of demand and total revenue, and why Homerdidn’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 theDeterminants 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 senseto be the one producing and selling these products? Why or why not?

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.

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.

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