ECON 1 Lecture 13: Econ_1_-_Lecture_13
Document Summary
Signaling: taking action to reveal one"s own private information (use warrant to signal potential buyers that my cars are better) Reputation: if interactions occur multiple times, parties can use their past history to indicate that the other party has full information. Statistical discrimination: distinguishing between choices by generalizing based on observable characteristics in order to fill in missing information choosing from difference movies based on which type of movie i typically like best. Regulation: the government requires information disclosure or requires participation in a market. (nutrient labels, side effects of medication. etc) Firms intend to maximize their economic profit. Firms make decisions on how much of a good to produce. Like any other choice, this involves cost-benefit analysis. Total revenue is the amount that a firm receive from the sale of goods and service and is calculated as the quantity sold multiplied by the price paid for each unit: Total revenue = quantity x value per unit.
