The Firm and Its Constraints


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The Production Function

This is a long advertising video for Ford Tractors produced in 1956, explaining how Ford tractors helped produce the suburbs that grew up after World War II. Where can you see the concept of economies of scale? Why did the suburbs grow after World War II and not before? Viewers of this video in the 1950s probably reacted very differently than viewers today react. Why? This chapter explains that firms face three fundamental constraints on them in their quest to make a profit. How are each illustrated in this clip? (This video is also available here and here.)

The Demand Curve for Output

Here is a clip from a British comedy in which the owner of a shop determines the price by estimating the maximum that the buyer will pay. This is an example of price discrimination.

You may enjoy another clip from the same show here that also illustrates price discrimination.

These links were checked on May 22, 2009.
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Copyright Robert Schenk