Episode Synopsis "8. The Firm"
Business men must make sure they can cover their costs by incoming revenue. The production function will yield a certain quantity of a product. The firm considers marginal costs and average costs to weigh where along the demand curve production is. Average revenues less average costs multiplied by quantity will reflect profits (or losses) for the firm. Every firm (not industry) will always be where the demand curve is elastic. Perfect and pure competition is where the demand curve for the firm is infinitely elastic - horizontal. Real life has falling demand curves. Everybody becomes a monopolist. The anti-trust movement was meant to purify competition. Monopoly had always meant government grants of privilege to certain industries. But now means falling demand curve - that's everybody.Part 8 of 14. Presented in 1986 at New York Polytechnic University.
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More episodes of the podcast Introduction to Microeconomics
- 1. Intro to Micro: Demand and Supply
- 2. Value
- 3. The Determination of Prices
- 4. Price Controls in the Oil Industry
- 5. Minimum Price Controls
- 6. Government Licensing of Industry and Minimum Wage
- 7. Mid-Term Review and The Theory of the Firm
- 8. The Firm
- 9. Monopoly and Competition
- 10. Government Cartels
- 11. The Structure of Production
- 12. Labor and Unions
- 13. The Labor Market
- 14. Interest Rates and Course Review