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Date ________________

Political and Industrial Revolution in a Bug's Life

Please watch the movie and answer the following questions. Assume the Ants are a firm in a competitive market instead of being a nation. We will say they are in an agribusiness firm and they produce, of all things… food.

1. How elastic is the demand for food? How is that related to the price of food?

2. Construct a graph comparing price and quantity demanded for Ant food.

3. Construct a graph comparing total revenue (in thousands of small, pretty pebbles) to quantity demanded of Ant food.

4. How much time would the Ants have to respond to a change in demand? How will that affect price elasticity?

5. What are some complimentary goods for Ant food? Substitute goods? How would their price changes affect demand for ant food?

6. If more affluent bugs preferred food made by Bees to food made by Ants, what would that imply about Ant food?

7. Once the Ants industrialized food production, what will be the effects of adding additional workers to production? Will the current number of Ants harvesting food be too many, resulting in a layoff?

8. What would be the opportunity cost of the Ant corporation diversifying production?

9. What are some short-run and ling run decisions that could be made about production?

10. What if the Ant corporation acquired other Anthills? What could be the possible benefits and pitfalls of such acquisitions?

11. Imagine dozens of other Anthills, each producing food. Describe what conditions would prevail if there were pure competition, monopolistic competition, oligopoly, and monopoly. Which market model do you think would benefit the Grasshoppers most? Which market model benefits the Ants most?

12. Assume the Ants are operating at the break-even point. What adjustments would be necessary if there were a drought and production was off for a season? What if a large part of the seed bearing grass died? Show the adjustments with a graph showing changes in ATC, AVC, and MC.

13. Assume the Grasshoppers are unable to make their own food and return to the Ants, who are the sole suppliers of food. What could you say about MR and Price in this case?

14. Now assume that many, many Grasshoppers needing food and many, many Anthills producing food. What will the Ants of Ant Island need to do to boost sales of their product?

15. If there were several dominant Anthills controlling others as subsidiaries, construct a graph showing MR, ATC, D, and MC for that market situation. What complications could arise in their sort of market?

16. In which sort of market condition would R&D expenditures by the Ants be maximized?

17. What if the Grasshoppers each were responsible for a small plot of land on Ant Island and did not band together, but instead sold rights to harvest grain to the Ants. What could you say about the resource market in this case?

18. How would wages for worker ants be affected if the Anthill were actually several different firms instead of a single firm?

19. What id the grain- harvester operators required special training? How would their wages be affected?

20. What if the grain-harvester operators unionized? How would that affect their wages? What could the firms do in reaction to the development?

21. What possible other uses could the land of Ant Island be out to that would increase the value of their rents?

Below are "Macro" questions Micro students can answer J

22. What would the production possibilities graph for Ant Island look like at the start of the film? When they are making the bird? At the end?

23. What would a circular-flow chart for Ant Island look like at the start of the film? When they are making the bird? At the end?

24. Is a circular-flow model sustainable if the Grasshoppers take in factors and return nothing in a traditional economy? In a command economy? In a market economy?

25. At the start of the movie, what are the resources of Ant Island? What resources do they lack most of all? What changes in the Ants' resources do we see through the film? Are the Grasshoppers entrepreneurial talent, or are they just annoying?