23. Relating short run and long run cost curves

[MattFerancini]

WHERE ARE VIDEO 24 TILL 29??

[Phantum2006]

you talk a little too fast. slow down

[jumbopie1]

its nice voice louder would be better

[nbayounga]

I understand this is of little relevance to your video, but I thought you would be the best person to ask seeing as you explain things so well!

[nbayounga]

Hi I was wondering if you could help me. I have an essay question (which implies a lot of content) which is- explain the profit maximization problem of a monopoly facing a downward sloping demand curve.

I know what the graph looks like, the monopoly would make supernormal profits which aren't competed away due to barriers of entry, but I do not understand why this is an essay question and what else I could possible write about this? And what it's meant by 'problem'

[nbayounga]

So would a perfectly competitive firm's short run average costs always be higher than long run average costs? Or would it be higher than or equal to the LRAC curve (seeing as there is a point of tangency between the long and short run AC curves)?

[intromediateecon]

@nbayounga Technically, SRAC is higher than or equal to LRAC. But, that only happens when the firm is stuck with the "right" amount of capital (what it would choose in the long run) in the short run.

[nbayounga]

I wish you were my economics teacher!

[MegaRazorex]

What happen if there is an increase in the level of wages? what will the diagram look like?

[intromediateecon]

@MegaRazorex The cost curves will shift upward from their current position (in the same way as each other). Earlier in this series of videos, I explain why AVC = w/(average product). If w goes up, AVC goes up too (and in a parallel fashion).

[MegaRazorex]

@intromediateecon If there is an increase in demand for iron ore (example) then firms will have to increase their production level right? how will this be shown using a diagram? will it be a shift of the isoquant curve to the right?

[flamedart]

excellent



[MyMacManiac]

I like the video, but the concept is still confusing :(

[yoyohlp]

great! =)

[fladdog]

this is excellent.

[TheLangdigaun]

Thanks for posting video. your sound is very low & camara position is so good. hope more videos soon.

[michaeltorre]

Thanks for the videos.

I'd suggest moving the position of the cam.