LECTURE THREE

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Decision Making Process of Consumers and Firms

The focus of this lecture is the decision making process. Students will learn about the consumer's purchasing pattern and firm's production process. Definitions of production and cost functions will be covered.

OBJECTIVES

1. Understand topics about consumption possibilities.

2. Define total and marginal utilities

3. Analyze the utility maximization model.

4. Differentiate between economic and accounting cost and profit.

5. Understand the short run and long run production and cost functions.

TOPICS

Please read all the lectures by clicking on the following topics.

CONSUMPTION POSSIBILITIES

UTILITY

UTILITY MAXIMIZATION MODEL

INDIFFERENCE CURVE

ECONOMIC PROFIT AND PROFIT MAXIMIZATION

PRODUCTION PROCESS

SHORT RUN

LONG RUN

 

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