AGED 570: Teaching H.S. Agricultural Economics Day 3: Teaching Producer Economics Part 1

Todays agenda Terms Share Pair Motivational Activity Muddiest Concept General Terminology Discussion Terms for Tomorrow

Terms Share Pair Input Cost Minimization Revenue Output Fixed Costs Marginal Revenue Production Function Variable Costs Marginal Value of Product Average Physical Product Sunk Costs Marginal Input Cost Marginal Physical Product Average Variable Cost Supply Curve Law of Diminishing Marginal Returns Average Fixed Costs Shut-Down Decision Average Total Costs Short-Run Stages of Production Marginal Cost Long-Run Elasticity of Production Profit Maximization

Motivational Activity for Production Terms Objective: To strengthen the students understanding of the production function and how to use it to make economic decisions Today we will be simulating a pizza parlor Round 1: One of you will be randomly selected to be the pizza maker, the rest of the individuals will be pizza consumers The pizza maker must make a square pizza that has four green dots (green olives), four black dots (black olives), four red dots (pepperoni), and four brown dots (sausage)

Motivational Activity for Production Terms The pizza topping must be distributed across the pizza as shown in the example pizza with each topping sizeable Once the pizza is made, then the pizza maker must deliver it to one customer The customer gets to examine the pizza and gets to reasonable decide whether the pizza is satisfactory or not If the pizza is satisfactory, then the pizza is considered delivered If the pizza is not satisfactory, a new pizza must be made The pizza maker has three minutes to make as many pizzas possible

Motivational Activity for Production Terms Round 2 The pizza maker now gets to hire one of the customers to help in the pizza making business The tasks for pizza making can be broken up anyway that the original pizza maker would like as long as all the rules in round 1 are followed Any added labor must complete a sufficient amount of work or the individual may be terminated Three minutes will be given for this round The subsequent rounds will follow in the same manner as round 2

Thought questions for the activity Based on the current information you collected, what are the different ways you could examine it? How could you base a decision on the number of individuals to hire given only the input and output information? Is there a way o visualize the information to help you understand how well you are producing? What other information could be helpful for you to make a better decision?

Thought questions for the activity Suppose you knew that the cost of a laborer for a day was $30 to hire and the cost of all the ingredients were pre-purchased and cost $500, could you make a better decision knowing this information? What information would you need to know to make a better decision based on these costs? Is there any other information you would need to know to make a better decision?

Thought questions for the activity Suppose you knew that a customer would pay you $5 per pizza, how can this help you make a decision? What would happen if your pizza price was $0.10 per pizza, given the original costs? What would be the optimal output you would produce? What would happen if you had the original $5 price, but a labor cost of $200 per person? What would be the optimal output you should produce? What would happen if you had the original labor cost and pizza price, would you produce if the pre-purchased ingredients were $10,000? What is the optimal output in this case? Does time matter in this decision?

Muddiest Point and Terms Discussion

What kind of examples could you use in your classroom to help students with these concepts?

Terms to know for tomorrow Isoquant Iso-Cost Marginal Rate of Technical Substitution Production Possibility Frontier Iso-Revenue Line Returns to Scale