eco106 unit4 discussion board on firms types structure and production costs
In Unit 4, we focus on firms: types, structure, and production costs. We follow with an introduction to the first of four market models – perfectly competitive firms.
Chapter 8
Facebook Learns the Benefits and Costs of Becoming a Publicly Owned Firm
Nine years after Mark Zuckerberg started Facebook in 2004, the company had more than 1 billion active users. Zuckerberg started Facebook because he believed that people were less interested in meeting new friends online than they were in finding a better way to stay in touch with friends they already had. In the fall of 2011, Facebook needed to raise funds quickly to finance its expansion. Turning Facebook into a public firm and selling stock would raise revenue, but buyers of the stock would have a partial claim on its profits and could question Zuckerberg’s leadership. In May 2012, Facebook finally did sell shares of stock to the public. But during the following year, Facebook had difficulty selling advertisements and revenue grew more slowing than expected. In 2013, Facebook’s stock finally rose above the initial price, providing gains for investors who bought at that price.
Chapter 11
Fracking, Marginal Costs, and Energy Prices
In recent years, technological changes have affected the oil industry. Changes in techniques and equipment have lowered the cost of drilling, making producing oil from shale rock profitable. In 2012, the United States experienced the largest increase in oil production in its history. Production of natural gas has also been increasing. These increases are due in large part to a new technology: hydraulic fracturing, or “fracking.†Fracking is controversial with some environmentalists who believe it has the potential to pollute ground water supplies. In the world market, oil is supplied to the point where the marginal cost of the last barrel equals the price buyers are willing to pay for it. In this sense, the last barrel of oil sold is produced in the North Sea or other areas where production costs are higher than they are in North Dakota or Saudi Arabia.
Chapter 12
Perfect Competition in Farmers’ Markets
In recent years, the demand for healthier food has increased. Many people have begun buying organically grown fruits and vegetables at farmers’ markets. Lured by higher profits, increasing numbers of farmers began participating in these markets. But the additional supply of produce has forced down prices and reduced profits. Many farmers have found that the profits they earn from selling in farmers’ markets are no longer higher than what they earn selling to supermarkets.
Unit Instructions
-Review course materials
-Read chapters 8, 11 and 12 and review PowerPoint slides
-Participate in online discussion thread for Unit 4 in the Discussion Board section
l can send the slides to your email later
