ECON1020 Lecture Notes - Lecture 7: Economic Surplus, Production Function, Marginal Cost
Document Summary
Week 7: the firm industry analysis and the costs of. These: models are then analysed for equilibrium and efficiency. A causal relationship: performance: market efficiency (social welfare, consumer surplus, profits), conduct: how firms behave in a given market structure (pricing strategies, advertising, research and development), structure: the competitive environment in the market. Industry analysis: market structure: market structure describes the competitive environment in which firms operate. It is determined by four characteristics which determine how firms behave (conduct) and how efficient the market is (performance). Monopoly (lecture 9) many small no some few one large very large significant full (prohibitive) possible n/a. Neoclassical economics assumes that the main objective of the firm is to maximise its profits. To identify how to produce to maximise profits, the firm needs to know how its revenues and costs change as it produces more. Revenue measures: total revenue (tr) = p x q.
