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2: Market Supply

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    Learning Objectives

    The learning objectives for this chapter are as follows:

    • Describe the firm’s production decision, specifically the conditions under which the firm will enter the market and the conditions under which the firm will exit the market.
    • Express the firm’s profit maximization problem in terms of revenue and cost.
    • Describe and explain the logic of the firm’s profit maximization condition (MR = MC).
    • Explain the idea of opportunity cost.
    • Identify variables that shift the supply schedule. Be able to predict the direction of the shift.
    • Distinguish between competing products in production and joint products in production. Provide examples of each.
    • Explain the derivation of input demands from profit maximizing input choices, and describe variables that shift demand schedules for inputs.
    • Explain producer surplus and compute producer surplus given a linear supply schedule.

    2: Market Supply is shared under a CC BY-SA 4.0 license and was authored, remixed, and/or curated by Michael R. Thomsen.

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