ECON-1006EL Chapter Notes - Chapter 5: Demand Curve, Lemonade Stand, Diminishing Returns
6 Dec 2016
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Chapter 5 is focusing on the seller"s side of the market. Task is to gain insight into the factors that determine the shape and position of the supply curve, which tells us how many units" suppliers want to produce and sell at different prices. In canada, and most other nations, most goods and services are offered for sale in markets and are sold by private firms whose main reason for existing is to earn profit for their owners. A firm"s profit is the difference between the total revenue it receives from the sale of its product and all costs it incurs in producing that product. Price taker is a firm that has no ability to influence the price at which it sells its product. It can decide to sell as much or as little as it wants, but the quantity it sells will not influence the market price. We assume that all firms are price takers.
