This concept is useful when you look more closely at why firms produce certain levels of output, taking opportunity cost and sunk fixed cost into consideration.
If you think you have understood a the principle of microeconomics, try answering the above.
The variable cost is a function of the quantity of an object being produced. The utility maximization problem serves not only as the mathematical foundation of consumer theory but as a metaphysical explanation of it as well. Some questions are logical and some are philosophical.
Grammatical Errors The text contains no grammatical errors.
In other words, it is the marginal benefit one could derive by choosing the second best comparable alternative to achieve the same purpose given that the choices are mutually exclusive. Here we study the model of perfect competition and move on to what many consider the antithesis of perfect competition, the monopoly model.
It concludes that in a perfectly competitive market with no externalitiesper unit taxesor price controlsthe unit price for a particular good is the price at which the quantity demanded by consumers equals the quantity supplied by producers.
To economists, rationality means an individual possesses stable preferences that are both complete and transitive.