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

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

3. 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

4. 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)

5. 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

6. 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

7. 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?

8. 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?

9. 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?

10. Muddiest Point and Terms Discussion

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

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