ECO320Y5 Chapter Notes - Chapter 2: Strategic Dominance, Oligopoly, Perfect Competition

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23 Jan 2018
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This theory describes how the typical consumer, constrained by a limited income, chooses among the many goods and services offered for sale: the second section deals with the choices made by business organizations or firms. We shall develop a model of the firm that helps us to see how the firm decides what goods and services to produce, how much to produce, and at what price to sell its output. In the third section, we shall consider how consumers and firms interact: the fourth section of microeconomic theory describes the supply and demand for inputs into the productive process. It is not possible to produce the same amount of output using a lower-cost combination of inputs. A is preferred to c: the preferences of the consumer are subjective. Only if the marginal cost (the decrease in utility from one dollar less of y) is less than the marginal benefit (the increase in utility from having one dollar more of x).

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