Site icon DiscussEconomics

Principles of Microeconomics Introduction

DiscussEconomics is about to being a series on introductory principles of microeconomics. This is perfect for beginner economists, those looking to brush up on some basic terms, and first year University students. I’m assuming that you can differentiate between the studies of micro and macro economics so don’t expect an explanation here!

Introduction to Microeconomics

There are fundamental assumptions when using microeconomic models while you’re trying to explain consumer and market behaviour. Firstly, firms (businesses) are assumed to operate with the fundamental intention of maximizing profits. Here are some more terms that are useful:

Total Revenue (TR):

Recall that a firm’s cost of production include:

Cost-output relationships

Fundamental point in cost analysis

***A functional relationship exists between the costs of production and the rate of output per period of time (ie. productivity)***

Cost function:

But we know from our production analysis that:

***Consequently, the level and behaviour of costs as a firm’s rate of output changes depend on:

[tags]intro microeconomics, introductory microeconomics, microeconomics, cost production[/tags]

Exit mobile version