Economists group industries into four distinct market structures:
Perfect Competition: is a market structure characterized by a very large number
of firms producing a standardized product (that is, a product identical to that of
Law of Demand
Markets bring together buyers (demanders) and sellers (suppliers), and exists in many
Consumers try to maximize utility subject to a budget constraint
Demand is a schedule or a curve that slows the various amounts of a peroduct that
Society possesses productive resources, such as labour, and managerial talent, tools
and machinery, and land and mineral deposits. These resources, employed in the
economy, help us produce goods and services that satisfy many of our economi
A firm can be organized several ways.
Firm: a business organization that owns and operates plants. Some firms
operate only one plant, but many own and operate several.
Plant: physical establishment- a factory, farm, mine, store, or
Every society needs to develop an economic system- a particular set of institutional
arrangements and a coordinating mechanism- to respond to the economic problem. The
economic system has to determine what goods are produced, how they are produced,
Industrial Concentration: it occurs whenever a single firm or a small number of firms
control the major portion of the output of an industry. One, two, or three firms dominate
the industry, potentially resulting in higher-than- competitive pric
The simplest theory of consumer choice rests squarely on the law of diminishing
marginal utility. This principle, states that added satisfaction declines as a consumer
axquires additional units of a given product.
Although consumer wants in gene