15.1 A Firm's Profit-Maximizing Choices
1) A market with a large number of sellers
A) can only be a perfectly competitive market.
B) might be an oligopoly or a perfectly competitive market.
C) might be a monopolistically com
Definition of Economics
economic questions arise because we
want more than we can get.
inability to satisfy all our wants is
we face scarcity, we must make
School of Business Administration
Eco 2301: Microeconomics
Building 11, room 104
035 86 33 87
[email protected] (the easiest way to reach me)
MW: 2:00 - 5:
Midterm Test (sample)
Student Name: .
Time: 60 minutes
Student Number: .
Total Mark: . /50
Converted Mark: ./10
Show your answers on the ANSWER SHEET at the end of this section.
1. A movement
The Economic Problem?
II. Production Possibilities Frontier (PPF)
models scarcity, choice, & opportunity cost
A World where only two goods exist
Limited and Fixed resources and technology
PPF shows maximum possible
Efficiency and Equity
Markets in Action
Self-Interest and the Social Interest
Your Money, time, energy are scares
When you buy a pair of shoes or a textbook or pay your
meal, or even just take a shower, you express y
Output & Costs
Decision Time Frames
The firm makes many decisions to achieve its main
objective: profit maximization.
Some decisions are critical to the survival of the firm
Some decisions are irreversible (or very co
Everything you earn and most things you buy are taxed.
Who really pays these taxes?
Income tax is deducted from your pay, and the sales tax
is added to the price of the things you buy, so isnt it
Elasticities of Demand and Supply
From the previous Chapter
Law of Demand:
Law of Supply:
By how much?
Example: if P of battled water price increases by 50%
By how much th
Demand and Supply
Build a model
& their interaction
how prices are determined and how markets guide and coordinate
Use the model
the impact of changes
Definition of Economics
All economic questions arise because we want more than
we can get.
Our inability to satisfy all our wants is called scarcity.
Because we face scarcity, we must make choices.
Microeconomics Eco 2301
What Makes a Monopoly?
single supplier of good
firm supply = supply
firm demand = .demand
How Does it Happen?
1. no close substitutes
otherwise, makers of substitutes are competition
How Perfect Competition Arises
Perfect competition arises:
When firms minimum efficient scale is small relative to market demand so
there is room for many firms in the industry.