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Table of Contents

I. Introduction

Intro to Economics

22m 40s

- Intro0:00
- Lesson Overview0:09
- Basic Economic Concepts1:07
- What is Economics?1:47
- Definition of Economics1:50
- Scarcity2:25
- Four Factors of Production (Resources)3:02
- Land3:26
- Labor3:43
- Capital4:02
- Entrepreneurship4:35
- Needs vs. Wants5:00
- Needs5:22
- Wants6:01
- People Choose8:46
- Need8:48
- Economics is About Making Choices8:59
- Every Choice Has a Cost9:29
- Opportunity Cost9:43
- Trade-Off9:55
- Positive Economics vs. Normative Economics10:23
- Positive Economics10:32
- Normative Economics11:13
- Marginal Analysis12:29
- All or Nothing Propositions12:48
- To Consume the Next Unit or Not12:52
- Key to Understanding Economics12:57
- Example 113:29
- Example 214:46
- Example 317:02
- Example 420:48

Production Possibilities Frontier

17m 47s

- Intro0:00
- Lesson Overview0:08
- I. Basic Economic Concepts0:48
- Production Possibilities Frontier1:23
- Points of Efficiency1:40
- Points of Underutilization1:43
- Famous 'Guns or Butter' Analogy2:20
- Increasing Opportunity Cost2:59
- Law of Increasing Opportunity Cost3:07
- Example: Economy of DVDs and Wine3:35
- Constant Opportunity Cost6:26
- Definition of Constant Opportunity Cost6:35
- Example: Economy of Soda and Flags6:50
- Example 19:35
- Example 211:06
- Example 312:54
- Example 414:19
- Example 516:28

Comparative Advantage & Trade

48m 19s

- Intro0:00
- Lesson Overview0:07
- I. Basic Economic Concepts0:45
- Trade and Specialization1:36
- I, Pencil3:29
- Market Economy4:28
- Command Economy5:02
- Mixed Economy5:46
- Absolute Advantage6:29
- Better at Producing a Particular Product6:35
- Example6:45
- Comparative Advantage9:09
- Lower Opportunity Cost in Producing a Particular Product9:17
- Example9:26
- Comparative Advantage & PPF Graph16:08
- Example 120:41
- Example 224:29
- Example 329:13
- Example 432:52
- Example 537:46
- Example 643:39

Utility Maximization

31m 21s

- Intro0:00
- Lesson Overview0:14
- I. Basic Economic Concepts0:47
- Utility vs. Marginal Utility2:18
- Utility2:22
- Marginal Utility2:53
- Examples3:02
- Marginal Utility Per Dollar4:07
- Definition of Marginal Utility Per Dollar4:12
- Constrained by a Budget4:33
- Role of Scarcity4:35
- Diminishing Marginal Utility7:20
- Definition of Diminishing Marginal Utility7:24
- Krispy Kreme Experiment8:46
- Optimal Consumption Bundle9:59
- Optimal Consumption Bundle Rule10:02
- Select the Higher Marginal Utility Per Dollar10:34
- Value Begins to Fall10:42
- Example 111:04
- Example 214:15
- Example 318:16
- Example 421:13
- Example 524:09
- Example 627:50

II. Supply & Demand

Price & Quantity

39m 7s

- Intro0:00
- Lesson Overview0:14
- II. Product Markets1:05
- Supply and Demand2:22
- Supply and Demand Model2:24
- Demand Curve2:28
- Supply Curve2:43
- Factors2:56
- Equilibrium Price and Quantity3:45
- Demand Schedule and Demand Curve3:56
- Market Demand Schedule3:59
- Market Demand Curve4:07
- Example4:18
- Shifts of the Demand Curve9:39
- Changes in the Prices of Related Goods9:47
- Changes in Income12:14
- Changes in Tastes12:57
- Changes in Expectations13:58
- Increase in Demand (Rightward Shift)14:44
- Decrease in Demand (Leftward Shift)15:37
- Supply Schedule and Supply Curve16:27
- Market Supply Schedule16:37
- Market Supply Curve16:46
- Example16:52
- Shifts of the Supply Curve20:19
- Changes in Input Prices20:29
- Changes in Technology20:43
- Changes in Expectations21:09
- Increase in Supply (Rightward Shift)21:41
- Decrease in Supply (Leftward Shift)22:51
- Supply, Demand, and Equilibrium23:45
- Equilibrium Price23:50
- Equilibrium Quantity23:57
- Equilibrium24:05
- Surplus and Shortage25:15
- Surplus25:19
- Shortage25:30
- Example25:43
- Example 129:26
- Example 230:18
- Example 331:37
- Example 434:11
- Example 536:37

Supply & Demand

25m 11s

- Intro0:00
- Lesson Overview0:13
- II. Product Markets0:57
- Shifts to the Demand or Supply Curve1:50
- Demand Shift to the Right1:55
- Demand Shift to the Left2:11
- Supply Shift to the Right2:27
- Supply Shift to the Left2:43
- Example 12:59
- Example 24:28
- Example 36:13
- Example 48:17
- Shifts of Both the Demand and Supply Curves10:05
- Demand and Supply Shift to the Right10:52
- Demand and Supply Shift to the Left11:15
- Supply Shift to the Left and Demand Shift to the Right11:52
- Supply Shift to the Right and Demand Shift to the Left12:17
- Example 513:44
- Example 617:14
- Example 719:21
- Example 821:43

Price Controls

27m 5s

- Intro0:00
- Lesson Overview0:12
- II. Product Markets1:01
- Why Price Controls are Inefficient1:51
- Price Controls3:10
- Price Ceiling3:34
- Price Floor3:41
- Effective Price Ceiling4:08
- Rent Control4:16
- Effective Price Ceiling Must be Below Equilibrium Price4:27
- How a Price Ceiling Causes Inefficiency6:36
- Inefficiency Allocation to Consumers6:50
- Wasted Resources7:20
- Inefficiently Low Quality7:51
- Effective Price Floor8:45
- Minimum Wage8:53
- Effective Price Floors Must be Above Equilibrium Price9:40
- Price Floor on Agricultural Products13:42
- 'Butter' Mountain16:09
- How a Price Floor Causes Inefficiency17:41
- Inefficiently Low Quantity17:47
- Wasted Resources18:11
- Inefficiently High Quality18:39
- Example 120:05
- Example 221:12
- Example 322:36
- Example 423:46
- Example 525:06

Price Elasticity of Demand

58m 45s

- Intro0:00
- Lesson Overview0:10
- II. Product Markets1:26
- What is Elasticity of Demand?2:37
- Definition of Price Elasticity of Demand2:40
- Ceteris Paribus3:35
- Elastic Demand6:57
- e>17:02
- Product is Price-Sensitive7:47
- Flat Demand Curve8:05
- Inelastic Demand12:02
- e<112:06
- Product is Not Sensitive to Price Change13:14
- Steep Demand Curve14:09
- Example 119:20
- Example 225:01
- Using the Midpoint Method to Find Elasticity30:40
- Own Price Elasticity31:22
- Absolute Value Removes Negative Sign32:20
- Example 332:38
- Example 438:37
- Factors That Determine Price Elasticity44:06
- Whether Close Substitutes are Available44:13
- Whether the Good is a Necessity or a Luxury44:48
- Time45:45
- Share of Income Spent of the Good46:32
- Price Elasticity Along the Demand Curve47:11
- Example 556:22

Income, Cross-Price & Supply Elasticities

39m

- Intro0:00
- Lesson Overview0:16
- II. Product Markets1:31
- What is Cross-Price Elasticity of Demand?2:57
- Definition of Cross-Price Elasticity of Demand3:01
- Formula3:16
- Substitutes6:24
- Definition of Substitutes6:26
- Items Match as Substitutes6:50
- If the Price of Good A Increases, then the Quantity Demanded of Good Will Increase7:34
- If the Price of Good A Decreases, then the Quantity Demanded of Good Will Decrease8:08
- Example 18:34
- Complements9:35
- Definition of Complements9:44
- Items Match as Complements10:01
- If the Price of Good A Decreases, then the Quantity Demanded of Good Will Increase11:32
- If the Price of Good A Increases, then the Quantity Demanded of Good Will Decrease11:48
- Example 212:38
- Definition of Income Elasticity of Demand14:30
- Normal Good15:08
- Inferior Good15:43
- Income-Elastic16:56
- Income-Inelastic17:04
- Formula for Income Elasticity of Demand17:20
- Formula17:44
- Example 321:39
- Example 424:52
- Price Elasticity of Supply27:59
- Definition of Price Elasticity of Supply28:10
- Formula28:18
- Availability of Inputs Affects Elasticity28:46
- Two Extreme Cases of Supply Price Elasticity29:35
- Example 532:41

Total Surplus, Deadweight Loss & World Trade

47m 51s

- Intro0:00
- Lesson Overview0:16
- II. Product Markets1:25
- What is Consumer Surplus?2:32
- Definition of Consumer Surplus2:35
- Supply and Demand Graph2:44
- What is Producer Surplus?5:20
- Definition of Producer Surplus5:40
- Supply and Demand Graph5:52
- CS + PS8:52
- Example 110:17
- Example 212:21
- How Does a Tax Affect Hotel Owners?14:19
- Excise Tax on Hotel Owners14:37
- Equilibrium Price14:42
- Excise Tax on Hotel Guests19:35
- Equilibrium Price20:03
- Tax Incidence20:13
- Example 322:36
- International Trade26:03
- Autarky26:10
- Importing Countries28:21
- World Price28:22
- Positive Net Gain28:49
- Exporting Countries32:28
- World Price33:35
- Positive Net Gain33:43
- Example 437:46

Production Function & Firm Costs

41m 14s

- Intro0:00
- Lesson Overview0:09
- II. Product Markets0:55
- Long Run vs. Short Run1:46
- Production Function1:51
- Fixed Input2:04
- Variable Input2:20
- Long Run2:36
- Short Run2:54
- Marginal Product of Labor3:03
- Definition of Marginal Product of Labor3:06
- Example MPL Curve3:50
- Different Types of Marginal Returns7:18
- Increasing Marginal Returns7:22
- Diminishing Marginal Returns7:49
- Negative Marginal Returns8:00
- Was Thomas Malthus Correct?10:59
- Thomas Malthus Prediction11:10
- Dismal Science11:29
- Fixed, Variable and Total Cost12:34
- Fixed Cost12:45
- Variable Cost13:06
- Total Cost13:23
- Average Cost15:27
- Marginal Costs22:17
- Relationship Between ATC and MC Curves27:02
- Minimum-Cost Output27:20
- Output Less Than Minimum-Cost Output27:55
- Output Greater Than Minimum-Cost Output28:02
- Just Do It, Smile and Smirk30:09
- MC Curve30:24
- ATC Curve30:45
- AVC Curve31:09
- True or False, or Uncertain?32:57
- Example 132:59
- Example 234:36
- Short-Run Total Cost Function Example38:19

Long-Run Costs & Economies of Scale

32m 23s

- Intro0:00
- Lesson Overview0:10
- II. Product Markets1:10
- Short-Run vs. Long-Run Costs1:46
- Business Decisions1:51
- High Fixed Cost2:19
- Low Fixed Cost2:28
- Example3:03
- Short-Run and Long Run ATC Curves8:25
- Returns to Scale13:25
- Economies of Scale13:34
- Diseconomies of Scale14:27
- Sources of Economies of Scale16:18
- Increased Specialization That Larger Output Levels Allow16:27
- Large Initial Set-Up Cost17:00
- Network Externalities17:51
- Sunk Cost19:05
- Definition of Sunk Cost19:11
- Example19:52
- Fill in the Following Cost Table22:02
- Short-Run vs. Long-Run Example26:43

III. Market Structures

Perfect Competition

47m 49s

- Intro0:00
- Lesson Overview0:14
- II. Product Markets1:31
- Types of Market Structure2:47
- Perfect Competition2:58
- Monopoly3:33
- Oligopoly4:08
- Monopolistic Competition4:45
- Perfect Competition5:35
- Price-Taking Firm5:45
- Price-Taking Consumer6:14
- Perfectly Competitive Market6:55
- Three Characteristics of Perfect Competition7:24
- Production and Profits9:12
- Optimal Output Rule9:20
- The Industry Supply Curve12:27
- Definition of Industry Supply Curve12:35
- Shut-Down Price12:49
- Price Above AVC13:13
- The Long-Run Industry Supply Curve18:01
- Definition of Long-Run Industry Supply Curve18:07
- Example Graphs19:39
- The Effect of an Increase in Demand25:19
- Increase in Demand25:24
- Increase in Demand Raises Price and Profit27:03
- Perfect Competition in Long-Run Equilibrium30:45
- No Economic Profit30:57
- No Firms Enter or Leave31:37
- The Market is Always Right31:50
- Perfect Competition Making Short-Run Profit34:00
- Perfect Competition Incurring Short-Run Loss38:57
- Summary of Profitability and Production43:20

Monopoly

42m 43s

- Intro0:00
- Lesson Overview0:12
- II. Product Markets1:13
- Characteristics of a Monopoly2:53
- Control of a Scarce Resource or Input3:18
- Economies of Scale3:40
- Technological Superiority4:25
- Government Monopolies5:10
- Monopoly and Price Discrimination5:39
- Price Discrimination5:53
- Perfect Price Discrimination8:11
- Monopoly Making a Profit12:08
- Monopoly Incurring a Loss20:42
- Monopoly vs. Perfect Competition23:47
- P=MC23:55
- P>MR=MC24:09
- Monopoly24:25
- Reading a Monopoly Graph29:17

Monopoly & Public Policy

42m 46s

- Intro0:00
- Lesson Overview0:09
- Monopoly vs. Perfect Competition (Surplus)1:06
- Deadweight Loss1:43
- Welfare Effects of Monopoly7:02
- Increase Profits, Decrease Consumer Surplus7:07
- Perfectly Competitive Firms Profit-Maximize7:47
- Deadweight Loss8:15
- Public Ownership of Monopolies8:50
- In Theory10:16
- In Practice10:43
- Unregulated vs. Regulated Natural Monopoly12:03
- Unregulated Monopoly13:14
- Regulated Monopoly13:20
- Monopoly Practice Problem 118:26
- Monopoly Practice Problem 221:34
- Monopoly Practice Problem 324:34
- Monopoly Practice Problem 426:21
- More Monopoly Practice 131:50
- More Monopoly Practice 234:57
- More Monopoly Practice 337:17
- More Monopoly Practice 439:49

Oligopoly & Game Theory

50m 43s

- Intro0:00
- Lesson Overview0:08
- Characteristics of an Oligopoly1:06
- Interdependence1:12
- Few Sellers with Significant Control of Pricing1:32
- Duopoly1:48
- Incentive to Collude1:59
- Cartel2:24
- Game Theory3:33
- Two-Player Model3:46
- Application sin Economics, Military Strategy, Politics4:39
- Nash Equilibrium5:05
- Game Theory (Prisoner's Dilemma)5:31
- Dominant Strategy5:41
- Prisoner's Dilemma6:21
- Game Theory (Chicken)12:37
- Game Theory (One Dominant, One Not)19:54
- Overcoming Prisoner's Dilemma26:29
- Strategic Behavior27:31
- Tit for Tat Strategy27:37
- Tacit Collusion28:17
- Collusion28:46
- (Yet Another) Game Theory Example 129:14
- (Yet Another) Game Theory Example 233:02
- (Yet Another) Game Theory Example 334:40
- (Yet Another) Game Theory Example 437:12
- Final Game Theory Example 139:21
- Final Game Theory Example 241:39
- Final Game Theory Example 343:10
- Final Game Theory Example 445:29

Monopolistic Competition

26m 54s

- Intro0:00
- Lesson Overview0:09
- Characteristics of Monopolistic Competition1:01
- Large Number of Competing Firms1:13
- Differentiated Products2:05
- Free Entry and Exit3:09
- Profitable Firm in Monopolistic Competition4:10
- Unprofitable Firm in Monopolistic Competition7:54
- Long-Run Zero-Profit Equilibrium10:15
- Profitable10:23
- Unprofitable10:46
- Demand Curve11:10
- Comparing Perfect and Monopolistic Competition13:36
- Both13:42
- Perfect Competition13:57
- Monopolistic Competition14:11
- Product Differentiation and Advertising18:44
- Differentiation by Style or Type19:04
- Differentiation by Location19:45
- Differentiation by Quality20:23
- Ford vs. General Motors21:06
- Monopolistic Competition Example22:28

IV. Factor Markets

Factor Markets

43m 37s

- Intro0:00
- Lesson Overview0:12
- Economy's Factors of Production1:43
- Land2:21
- Labor2:31
- Capital2:39
- Entrepreneurship3:22
- Why Factor Prices Matter4:01
- Derived Demand4:05
- Example4:38
- Total Product vs. Marginal Product7:12
- Total Product7:40
- Marginal Product7:52
- Value of the Marginal Product11:06
- Value of the Marginal Product of Labor Formula11:26
- Hiring Decision Rule13:50
- Graphing the VMPL (or MRP) Curve16:11
- Shifts of the Factor Demand Curve18:19
- Changes in the Price of Goods18:26
- Changes in Supply of Other Factors20:08
- Changes in Technology21:19
- Factor Market Example22:32
- Another Factor Market Example32:48

Labor Supply & Cost Minimization

46m 6s

- Intro0:00
- Lesson Overview0:12
- Work vs. Leisure1:09
- Labor Market1:45
- Individual Labor Supply Curve2:32
- Substitution Effect2:47
- Income Effect2:55
- Backward-Bending Labor Supply Curve5:31
- Shifts of the Labor Supply Curve9:59
- Changes in Preferences and Social Norms10:12
- Changes in Population10:49
- Changes in Opportunities11:12
- Changes in Wealth13:14
- Determining the Optimal Input Mix14:49
- Substitutes and Complements in Factor Markets15:25
- Cost Minimization16:34
- Capital vs. Labor20:05
- Example 120:08
- Example 223:39
- Theories of Income Distribution25:51
- Marginal Productivity and Wage Inequality26:09
- Market Power28:02
- Efficiency Wages28:44
- Discrimination30:48
- Factor Market Example 132:59
- Factor Market Example 239:05
- Factor Market Example 342:44

V. Market Failure and the Role of Government

Positive & Negative Externalities

39m 21s

- Intro0:00
- Lesson Overview0:07
- The Economics of Pollution1:06
- Marginal Social Cost of Pollution2:20
- Marginal Social Benefit of Pollution2:49
- Socially Optimal Quantity of Pollution3:08
- Socially Optimal Quantity of Pollution3:38
- Upward-Sloping MSC Curve3:43
- Downward-Sloping MSB Curve4:31
- Socially Optimal Point4:51
- Market-Determined Quantity of Pollution5:30
- Graphing a Negative Externality7:28
- Negative Externality7:52
- High Market Price, Low Market Quantity8:25
- Graphing a Positive Externality11:49
- Positive Externality11:55
- Low market Price, Low Market Quantity12:39
- Government Solution15:17
- Correct a Negative Externality15:19
- Correct a Positive Externality15:31
- Private (or Coase) Solution20:29
- Coase Theorem20:30
- Example20:58
- Negative Externality Example23:14
- Positive Externality Example26:49
- Externality Example30:22
- Another Externality Example33:01
- Final Externality Example35:37

Public vs. Private Goods

26m 45s

- Intro0:00
- Lesson Overview0:10
- Characteristics of Goods1:53
- Rival2:27
- Nonrival2:39
- Excludable3:22
- Nonexcludable4:01
- Four Types of Goods5:08
- Private Goods5:12
- Public Goods5:19
- Common Resource7:17
- Artificially Scarce Good8:32
- Private Goods10:43
- Rival and Excludable10:47
- Free-Rider Problem11:21
- Most Items are Private Foods12:24
- Public Goods12:48
- Nonrival and Nonexcludable12:52
- Suffers from the Free-Rider Problem12:56
- Common Resources15:27
- Incentive to Overuse15:55
- Tragedy of the Commons16:47
- Artificially Scarce Resources18:47
- Marginal Cost to Society Watching Pay-Per-View19:19
- Computer Software and Audio Files Share Same Characteristic20:29
- Healthcare and Government22:02

Income Inequality & Income Distribution

31m 8s

- Intro0:00
- Lesson Overview0:10
- The Problem of Poverty1:13
- Definition of Poverty1:17
- Poverty Threshold1:43
- Who are the Poor?3:48
- 1 in 7 People in 20093:53
- Female-Headed Households5:05
- Part-Time Workers5:40
- What Causes Poverty?6:14
- Lack of Education6:23
- 1979 Average Hourly Wage17:03
- 2009 College Premium7:48
- Other Causes of Poverty8:35
- Economic Inequality9:09
- Mean Income and Median Income9:24
- Income is Unequally Distributed10:43
- Gini Coefficient13:33
- Definition of Gini Coefficient13:35
- High Levels of Inequality13:57
- Gini Coefficient in the United States14:26
- High Gini Levels14:41
- Lorenz Curve14:47
- United States Rates of Income Growth17:27
- Three Types of Taxes19:54
- Proportional Tax20:39
- Regressive Tax21:16
- Progressive Tax22:28
- Means-Tested Programs24:46
- Welfare24:52
- Temporary Aid for Needy Families25:00
- Supplemental Security Income26:05
- Negative Income Tax26:18
- Food Stamps and Medicaid27:00
- Social Security and Unemployment27:35
- Retirement Income27:56
- Wages Taxed28:29
- Unemployment Insurance28:51
- Trade-Offs30:21

VI. Practice AP Exam

AP Practice Exam: Multiple Choice, Part I

1h 15m 2s

- Intro0:00
- Question 10:27
- Question 21:48
- Question 32:53
- Question 44:43
- Question 56:37
- Question 68:10
- Question 79:19
- Question 811:01
- Question 912:03
- Question 1014:37
- Question 1115:19
- Question 1216:35
- Question 1317:41
- Question 1419:24
- Question 1520:15
- Question 1621:08
- Question 1721:49
- Question 1823:17
- Question 1923:59
- Question 2024:48
- Question 2125:33
- Question 2227:19
- Question 2328:03
- Question 2429:52
- Question 2530:28
- Question 2631:19
- Question 2733:11
- Question 2834:55
- Question 2936:14
- Question 3037:55
- Question 3139:13
- Question 3240:27
- Question 3341:57
- Question 3443:26
- Question 3545:40
- Question 3646:37
- Question 3747:22
- Question 3849:09
- Question 3950:09
- Question 4031:37
- Question 4152:43
- Question 4255:35
- Question 4357:02
- Question 4458:27
- Question 4559:10
- Question 461:00:00
- Question 471:01:22
- Question 481:01:52
- Question 491:03:20
- Question 501:05:09
- Question 511:05:45
- Question 521:06:35
- Question 531:07:09
- Question 541:07:54
- Question 551:09:39
- Question 561:10:25
- Question 571:11:19
- Question 581:12:31
- Question 591:13:02
- Question 601:14:31

AP Practice Exam: Multiple Choice, Part II

29m 18s

- Intro0:00
- Question 10:22
- Question 21:04
- Question 32:54
- Question 43:34
- Question 54:48
- Question 66:12
- Question 77:40
- Question 88:31
- Question 99:48
- Question 1011:16
- Question 1111:48
- Question 1212:55
- Question 1314:40
- Question 1415:47
- Question 1517:05
- Question 1617:30
- Question 1717:55
- Question 1819:10
- Question 1919:57
- Question 2022:49
- Question 2123:53
- Question 2224:28
- Question 2324:51
- Question 2427:25

AP Practice Exam: Free Response, 2013

24m 18s

- Intro0:00
- Question 10:17
- Question 212:37
- Question 319:32

AP Practice Exam: Free Response, 2012

22m 32s

- Intro0:00
- Question 10:20
- Question 26:47
- Question 314:57

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For more information, please see full course syllabus of AP Microeconomics

For more information, please see full course syllabus of AP Microeconomics

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0 answers

Post by Rebecca Dai on November 7, 2014

In the last example, when ATC decreases, does it still intersect with MC at the minimum point? Why?

0 answers

Post by Rebecca Dai on November 7, 2014

what is excess capacity?

0 answers

Post by Rebecca Dai on November 7, 2014

Why is steeper demand curve more inelastic?

1 answer

Last reply by: Professor Jibin Park

Thu May 1, 2014 5:13 PM

Post by Richard Wolf on May 1, 2014

Don't all market structures have free entry and exit in the long run technically?

0 answers

Post by Professor Jibin Park on April 6, 2014

MC stays the same. MC is the change in TC/change in quantity. Also, you are right in that TC = FC + VC. If FC goes down, Total cost goes down but marginal cost is unaffected.

0 answers

Post by Elva Fu on April 6, 2014

In the last example, if FC is decreased, why MC stays the same? Isn't MC = change in TC/change in quantity and TC = FC + VC. Since FC cost goes down, TC goes down, and MC goes down as well?