Applying the POWIN Rule to Teaching Short-Run Costs in a Principles Course

Abstract:     
The author proposes to change the presentation order of short-run costs, a topic which constitutes a major hurdle for students in economics principles. By giving the leading role to the marginal variables over the total variables which can be practically ignored, the streamlined presentation provides a greater emphasis on economics as opposed to arithmetic without skipping any logical step. In addition to the Law of Diminishing Marginal Returns, it highlights the fundamental inverse relationship between unit-costs and productivity which is obfuscated by the traditional presentation.

Number of Pages in PDF File: 6

JEL Classification: A22, D24

working papers series