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Posts Tagged ‘Perfect Competition’

Teaching MC=MR with M&M’s

August 15, 2017 1 comment

Having just completed Perfect and Imperfect Competition with my Year 13 class I used a couple of packets of M&M’s to drum home the concept of marginal analysis MC=MR. It has always been something that students have struggled with but I am hoping this experience of creating graphs with M&M’s might help their understanding and when to use the concept.

Profit is maximised at the rate of output where the positive difference between total revenues and total costs is the greatest. Using marginal analysis, the firm will produce at a rate of output where marginal revenue equals marginal cost. Below are a few of the graphs done using M&M’s.
MM1MM3MM4.jpegMM2

 

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A2 Economics – Teaching MC=MR with M&M’s

August 4, 2016 Leave a comment

Having just completed Perfect Competition with my A2 class I used a couple of packets of M&M’s to drum home the concept of marginal analysis MC=MR. It has always been something that students have struggled with but I am hoping this experience of creating graphs with M&M’s might help their understanding and when to use the concept.

Profit is maximised at the rate of output where the positive difference between total revenues and total costs is the greatest. Using marginal analysis, the perfectly competitive firm will produce at a rate of output where marginal revenue equals marginal cost. Marginal revenue, however, is equal to price. Therefore, the perfectly competitive firm produces at an output rate where marginal cost equals the price of output. Remember that the firm will make profits as long as the extra revenue brought in from selling the last unit of output(MR) is greater than the extra cost which is incurred in producing it(MC). Below are some of the graphs they created – perfect competition normal profit, subnormal profit, supernormal profit and the firm and the market for long-run perfect competition.
MM1 MMs2MM2 MM3

 

A2 Economics – Teaching MC=MR with M&M’s

August 4, 2015 Leave a comment

Having just completed Perfect Competition with my A2 class I used a couple of packets of M&M’s to drum home the concept of marginal analysis MC=MR. It has always been something that students have struggled with but I am hoping this experience of creating graphs with M&M’s might help their understanding and when to use the concept.

Profit is maximised at the rate of output where the positive difference between total revenues and total costs is the greatest. Using marginal analysis, the perfectly competitive firm will produce at a rate of output where marginal revenue equals marginal cost. Marginal revenue, however, is equal to price. Therefore, the perfectly competitive firm produces at an output rate where marginal cost equals the price of output. Remember that the firm will make profits as long as the extra revenue brought in from selling the last unit of output(MR) is greater than the extra cost which is incurred in producing it(MC). Below are some of the graphs they created – subnormal profit and normal profit

MMs1

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A2 Economics – Teaching MC=MR with M&M’s

April 2, 2015 Leave a comment

For the last lesson before the Easter break I got students to do a variety of graphs using M&M’s. Long-run Perfect Competition, Short-run Perfect Competition, MC, AC and AVC to name just a few. A good exercise and an incentive to get them correct with the reward of eating the graph. Some creations below:

MM1
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A2 Revision – Perfect Competition

October 8, 2014 Leave a comment

Here is a video from the Khan Academy on Perfect Competition – good for revision of A2 Unit 2 Market Structures.

A2 Revision: The Perfectly Competitive Firm and the Market

September 25, 2014 Leave a comment

Supernormal, normal, and subnormal profit only identified what happens to the firm. However it is important to be aware of what is happening in the market as a whole. Take for instance a firm making supernormal profits. The price that the firm charges is determined by what is happening in the market (supply and demand). If a firm makes supernormal profits this attracts other firms into the industry to take advantage of these profits. Therefore the supply of firms in the market increases which in turn reduces the price that firms can charge and they now make normal profits and are in the long-run see fig below.

A2 Unit 2 – Perfect Competition

September 6, 2012 Leave a comment

With the mock exams approaching for southern hemisphere students here is another of Phil Holden’s revision presentations. This one is on Perfect Competition. Remember the following characteristics:

• All units of the commodity are homogeneous (i.e. one unit is exactly like another). If this condition exists, buyers will have no preference for the goods of any particular seller.

• There must be many buyers and sellers so that the behaviour of any one buyer, or any one seller, has no influence on the market price. Each individual buyer comprises such a small part of total demand and each seller is responsible for such a small part of total supply that any change in their plans will have no influence on the market price.

• Buyers are assumed to have perfect knowledge of market conditions; they know what prices are being asked for the commodity in every part of the market. Equally sellers are fully aware of the activities of buyer and sellers.

• There must be no barriers to the movement of buyers from one seller to another. Since all units of the commodity are identical, buyers will always approach the seller quoting the lowest price.

• Finally, it is assumed that there are no restrictions on the entry of firms into the market or on their exit from it.

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