Utility: satisfaction an individual derives from an activity
Buyers valuation: largest amount the buyer is willing to pay to obtain a given object
C (q): smallest amount of money the seller is willingne
Chapter 11: Asymmetric information
asymmetric information happens when one perso has more
information than the other party in a transaction.
- real estate < law against vices cachs
- used items
- stock market
Chapter 5: Market Equilibrium
1) Market equilibrium
Market equilibrium corresponds to the intersection of the supply and demand curves.
a) Market forces
The market forces at play in a competitive market are the result of competition between the
Chapter 4 : Competitive supply
1. Perfect competition
A perfectly competitive environment is a situation where all firms are price takers : they
cannot influence the market price.
The firm has no real freedom regarding the price it can charge
Too high: c
#2 A monopolist practicing explicit segmentation (thirddegree price discrimination)
Chapter 9: Game theory and strategic interaction
1. Games and strategic thinking
Strategic thinking is important in many business and economic environments.
Oligopoly: two firms need to decide the price to set or the quantities to produce.
Chapter 10: Oligopoly
In this chapter we examine market structures other than monopoly, in which firms enjoy
market power. In an oligopoly, only a few firms compete with one another because entry
into the market is impeded. Therefore market p
Uncertainty and the
value of information
Attitudes towards risk
Reducing exposure to risk
Investing under uncertainty
The value of information
Attitudes towards risk
Uncertainty is everywhere
Car: How long will it last?
House: Will it be
Microeconomics CHAPTER 3
Firms, costs, and profit
A firm is an organization that transforms inputs into outputs.
a) The production process
Materials refer to all material resources that are transformed or expended during the
Microeconomics, chapter 2: Demand
Chapter focused on demand: the buyers side of the market.
1) Individual demand
Definition: A consumers individual demand is the relationship between the price of a good and
the quantity he is willing and able to purchase
Only one firm on the market it can choose its price.
2. Profit maximization
As always, profit is max when MR=MC
Because only 1 firm: q (firm output) = Q (market output)
In a monopoly, the demand curve the firm faces is the market d