econ2460unit1[1] - Module 1 Imperfect Competition and...

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Microeconomic Theory and Its Applications II ECON 2460 Module 1 Unit 1 1 Module 1 Imperfect Competition and Business Strategy Introduction Units 1 and 2 (textbook chapters 11 and 12) look at various types of imperfect competition involving a single producer (monopoly), a small number of producers (oligopoly) and many producers of a differentiated product (monopolistic competition). Unit 3 (textbook chapter 13) introduces the concept of strategic behaviour and some simple games that illustrate the basic concepts. Unit 4 (textbook chapter 14) applies these ideas, and those of earlier topics (covered in ECON 2450), to the cinema industry. You will quickly realize, however, that it is important to have understood the key concepts in chapters 1-10 of the textbook (covered in ECON 2450 Microeconomic Theory and its Applications I), or the equivalent material in other textbooks in intermediate microeconomics. If your recollection of some of these concepts is faulty, you will have trouble mastering the material in this and subsequent units. For this reason there will be references in parentheses to important background concepts from previous chapters to refresh your memory when necessary. In general, this course presumes that you understand such critical concepts as: Individual and market-demand curves (textbook chapters 3-5) Production and cost functions and firm and market-supply curves (textbook chapters 7-8) Perfectly competitive markets (textbook chapters 1 and 10) You will have a chance to test your understanding of these concepts (as well as those in textbook chapters 11-13) directly in textbook chapter 14. [One way to see if you remember the crucial ideas from ECON 2450 that you will need in this course is to turn now to textbook chapter 14, and answer questions 14.1-14.5. The answers to questions 14.1, 14.3 and 14.5 can be checked in the Brief Answers section at the back of the text.] The course and the textbook focus on application to problems in the real world. There is no point in mastering the ideas of microeconomics in the abstract if you do not understand how they might be applied to problems that you encounter in reading newspapers and magazines, making personal and business decisions, and evaluating social issues. [For example, can you explain why the text is American and not Canadian? Could it have something to do with economies of scale in book publishing? How large would the Canadian market be for intermediate microeconomics textbooks?] For this reason, there are examples in the text that set out a problem, pose questions, and provide sample answers. These example boxes should be studied carefully to see how the concepts presented in the text are applied in the real world. Similarly, textbook chapters 14, 17, and 19 apply the microeconomic concepts you are learning to specific industries in greater detail than the example boxes. Again, these chapters are integral to the mastery of intermediate microeconomics as a means of thinking about actual events and issues. In addition, you will see references in parentheses in these
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econ2460unit1[1] - Module 1 Imperfect Competition and...

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