INTRODUCTION

INTRODUCTION - AN INTRODUCTION TO MICROECONOMICS Economists...

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AN INTRODUCTION TO MICROECONOMICS Economists place those who participate in the market economy into one of four groups: Consumers, Firms, Factor Owners and Government CONSUMERS They buy goods and services produced by firms. Their objective is to maximize their utility or satisfaction. Consumer’s purchases are constrained by limited income and by the positive prices for each good. Consumers have limited income → every purchase subtracts from his income. He will attempt to gain as much utility as possible from each dollar spent. This is done by Marginal Analysis. Marginal Analysis Weighing additional benefits of a change against the addition costs of a change with respect to current conditions. FIRMS Firms hire productive factors or resources, combine them in a certain way to produce a final good, then sell that good to consumers. They play the role of buyers of factors and the sellers of goods. Firms as Buyers
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INTRODUCTION - AN INTRODUCTION TO MICROECONOMICS Economists...

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