Unit 1 Day 9
Marginal Cost/Benefit
Open Your Notebooks
• 2 definitions that should be in your
notebook
• specialization: doing 1 thing (Mr. Cookteaching, Florida-oranges, Nintendo-video
games)
• division of labor: splitting a big job up
(assembly line production; you color I’ll
cut)
Drive Video
Butterfinger Time
• A series of graphs will be shown on the
following slides.
• Raise your hand once you understand
what the graph is indicating.
• The first student to correctly identify what
the graph is indicating (and correctly
answer a few questions) will get a
Butterfinger.
• Maximum 1 per student.
A 2 Part-er
A 2 Part-er
Jumble--What Leads to
What???
Higher incomes
More human capital
Higher standard of living
Greater productivity
More education
Notes
More education leads to
More human capital leads to
Greater productivity leads to
Higher income /
Higher standard of living
Productivity Quiz
As a Class
BUT
Closed Notebooks!
1) Investment in factories and
machinery can result in all of the
following EXCEPT:
• A) higher labor productivity
• B) a higher standard of living for people in
the area
• C) economic growth
• D) resources exceeding wants
2) Which of the following is NOT
a reason why division of labor
makes productivity higher?
• A) Workers are happier doing simple, repetitive
tasks.
• B) Workers develop human capital through
practice at their specific task.
• C) Less time is needed to train and/or replace
workers, as they only need training on their
specific task, not all tasks required for
production.
• D) There is less/no transition time between
3) Select the answer that reflects
the most logical sequence of
events
• A) Investment in technology (R&D) leads
to higher productivity, which causes
economic growth and a higher standard of
living.
• B) A higher standard of living causes
economic growth, which leads to more
investment in technology and higher
productivity.
4) A college degree has the
biggest influence on which of the
following?
•
•
•
•
A. average income
B. credit score
C. probability of starting own business
D. life expectancy
5) Which is NOT generally
associated with increasing labor
productivity?
• A) better capital / capital made with better
technology
• B) education developing human capital
• C) time on the job / practice developing human
capital
• D) using craftsmen that work alone to create
the products from beginning to end
• E) division of labor / assembly line production
New Section of Notes
Marginal Cost & Marginal Benefit
Story Time
The Story Of The Hungry Lady &
The Peaches
New Notes Section:
Marginal Cost/Benefit
• Marginal cost: cost
• Marginal benefit: benefit
of 1 more
• Marginal revenue: revenue
Story Time Again
The Story Of The Dinners & The
Kisses
Notes
On the relationship between
marginal cost and marginal
benefit.
Handprint Activity
How many workers should be hired?
Profit maximizing output is
reached when marginal cost =
marginal revenue.
1st Period
Chad
Seth
Danielle
Zack
Michael
Baggott
Kyle
Kendall
Matth
Nicole
Arron
Hillary
Michael
Brannen
Shannon
Lacey
Haley
Virginia
Brandon
Erin
Morgan
Taylor
Teacher
Desk/
Work Area
2nd Period
Megan
Justin
Xavier
Andrew
Paige
Cyndilee
Chris
Charlee
Ryan
Stacey
Amanda
Chelsea
Brett
Jessica
Tim
Courtney Kylie
Forrest
Lacey
Alison
Daniel
Morgan
Emily
Teacher
Desk/
Work Area
Haley
Jordan
Alex
Avery
4th Period
Dee Dee
Moriah
Kristen
Kayla
Jade
(Empty)
Drew
Steven
Kara
Amber
Bethany
(Empty)
Kevin
Harley
JD
Courtne
y
Nick
Sonia
David
Melissa
Jordan
Edwards
Jonatha
n
Jordan
Marin
Mandie
Lauren
Kayla
Daylan
Catherine
Phillip
Justin
Raven
Ryne
Maggie
Teacher
Desk/ Work
Area
Andre’
Kelsea
Andrea’s Software Business
If you don’t get this, write this
example down.
• Marginal cost of each worker=$11
• # Workers
• 1
• 2
• 3
Total Revenue
$20
$35
$45
• How many workers should be hired?
# Workers
Total Revenue
10
$1100
11
$1450
12
$1750
13
$1975
14
$2100
15
$2175
# Workers
Total Revenue
10
$1100
11
$1450
12
$1750
13
$1975
14
$2100
15
$2175
Marginal Cost =
$128
Marginal cost of each additional
worker is $125. How many workers
should be hired?
# Workers
Total Revenue
10
$1153
11
$1445
12
$1708
13
$1865
14
$1950
15
$1998
Pounds Mozzarella
Total Cost
153
$380
154
$395
155
$415
156
$440
157
$470
158
$505
Pounds Mozzarella
Total Cost
153
$380
154
$395
155
$415
156
$440
157
$470
158
$505
Marginal revenue of
mozzarella is $21.
How many pounds of
cheese should be
purchased?
The Problem
• Example #2:
# Hot Dog Stands
Total Cost
153
$3800
154
$3950
155
$4150
156
$4400
157
$4700
158
$5050
Marginal revenue of
hot dog stands is
$225. How many hot
dog stands should be
purchased?
The Problem
• Example #3:
How many workers should be hired?
# Workers
Total Cost
Total Revenue
153
$3800
$8000
154
$3950
$8600
155
$4150
$9075
156
$4400
$9360
157
$4700
$9560
158
$5050
$9710
1. Marginal cost of workers is
$276. How many workers should
be hired?
•
•
•
•
•
A) 11
B) 12
C) 13
D) 14
E) 15
# Workers
Total Revenue
10
$1153
11
$1445
12
$1708
13
$1865
14
$1950
15
$1998
2. Marginal cost of each
additional worker is $78. How
many workers should be hired?
•
•
•
•
•
A) 11
B) 12
C) 13
D) 14
E) 15
# Workers
Total Revenue
10
$1153
11
$1445
12
$1708
13
$1865
14
$1950
15
$1998
3. Marginal revenue of each hot
dog stand is $320. How many hot
dog stands should be purchased?
# Hot Dog Stands
•
•
•
•
•
A)154
B)155
C)156
D)157
E)158
Total Cost
153
$3800
154
$3950
155
$4150
156
$4400
157
$4700
158
$5050
4. Marginal revenue of each hot
dog stand is $193. How many hot
dog stands should be purchased?
# Hot Dog Stands
•
•
•
•
•
A)154
B)155
C)156
D)157
E)158
Total Cost
153
$3800
154
$3950
155
$4150
156
$4400
157
$4700
158
$5050
5. How many workers should be hired?
# Workers
Total Cost
Total Revenue
153
$3800
$8000
154
$3950
$8600
155
$4150
$9075
156
$4400
$9315
157
$4700
$9515
158
$5050
$9665
•
•
•
•
•
A) 154
B) 155
C) 156
D) 157
E) 158