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.
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
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