Profit Maximization (Short Run) for Price Takers—Flash Animation
Publication: Journal of Economic Education
Volume: Volume 37, No. 1
Issue: Winter 2006
Page: 123
Author(s): K. K. Fung, Sri Harsha Kolar and Pavan Karnam
Address (Principal Author): K. K. Fung
Economics Department
Fax Number: 901.678.2685
Office Phone: 901.678.4626
Internet Address (Principal Author):
Title: Profit Maximization (Short Run) for Price Takers – Flash Animation
URL: http://flashecon.org/profitA/profitA_main.html
Descriptive Note: Profit maximization under different market structures forms the backbone of a microeconomics principles course. However, the complicated geometry of profit maximization has caused many students and some instructors to stumble. Although static transparencies help, many graphical illustrations benefit from synchronization of changes within the diagram. For example, as the horizontal demand curve for the perfectly competitive firm moves up or down to reflect price changes, its intersections with the marginal cost curve should dynamically trace out a series of maximum profit output points and the resulting profit or loss. Some illustrations require synchronization of changes between two diagrams. For example, the intersection between the market and the firms should simultaneously show how prices determined by the market affect probability at the firm, which affects the supply through entry and exit. Flash animations go through these synchronized illustrations step by step with much greater transparency and mathematical accuracy.
This set of Flash animations has five modules. Each module consists of multiple steps separated by pauses. Each step has a unique ID number for easy identification. A menu of navigation buttons allows users to play in sequence or skip backward or forward to a specific step. Each step starts with a brief balloon note, and the animation follows at the click of a button. Such navigational flexibility makes the animations suitable both for classroom presentation and self-paced after-class review. There are also notes, short-answer questions, static slides, and an interactive quiz. To enhance their usefulness, these animations are linked to another set of animations on production and cost (Fung 2004).
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