Theory of the Firm: Module 03
After Completing This Module You Must Be Able to:
 Define and differentiate among different models of competition: (perfect competition, monopolistic competition, oligopolistic competition, and monopoly).
 Define the concepts of’ firm’ and ‘industry’.
 Define, explain, and calculate total product, marginal product, and average product, and describe the relationship among these concepts.
 Define and interpret production functions.
 Define and differentiate between short run and long run and between fixed and variable inputs.
 Define the law of diminishing returns and explain how it is depicted by the total product and marginal product curves.
 Explain the relationship between production and cost.
 Define and differentiate between explicit and implicit costs.
 Define and calculate cost graphs.
 Calculate and define fixed, variable, average, marginal, and total costs, and explain how they vary with the level of output in the short run and long run.
 Define and explain economies and diseconomies of scale and constant returns to scale.
 Define and calculate the leastcost combination of inputs to employ for a firm.
 Define maximization of profits.
 Apply the concepts of marginal cost and marginal revenue to determine maximization of profits.
 Understand and apply the rule MR = MC.
 Understand the concept of minimization of losses.
 Define the shutdown criterion (or rule).
 For pure competition:(a) define and explain the conditions under which it functions; (b) construct marginal revenue/cost analyses to determine price and output; (c) determine the shortrun and long run equilibrium; and (d) identify the shortrun market supply curve.
 Understand the basic characteristics of monopoly, monopolistic competition and oligopoly
 Construct marginal revenue/cost analyses to determine price and output.
 Determine the shortrun and long run equilibrium for monopolistic competition.
 Compare and contrast pricing and output between and among differing types of firms.
 Compare and contrast the demand curve and marginal revenue curve.
 Compare and contrast allocative and technical (productive) efficiency among the differing types of firms.
 Compare and contrast product differentiation among differing types of firms.
 Compare and contrast the degree of price discrimination among firms.
 Compare and contrast the effects of government regulation to increase efficiency.
Tasks for This Module
 Read Economics, chapters 811 (that is a lot of reading!).
 View video, “Accounting vs. Econ Costs”
 Complete “01 accounting & econ costs”
 View videos, “Fixed & Variable Costs,” “Cost Curves,” "Diminishing Marginal Returns I," and "Diminishing Marginal Returns II," and " Do We REALLY Need ALL These Graphs?"
 Complete handouts, “02 marginal product marginal cost” and “03 firms' cost curves.”
 View videos, "Firms' Revenue Curves," "Profit Maximizing," "MC=MR," “Perfect Competition Intro,” & “Perfect Competition Graph.”
 Complete handouts, “05 intro perf comp” “06 perf comp supply.”
 View wideos, "Perf. Comp. Loss Graph," "Perf. Comp. Review Graphs," & "The LRATC Curve."
 Complete handouts, "07 comp Eq in short & long run," "08 LRAC curve," & "09 perfcomp graph."
 Successfully complete Quiz/Test 03 Costs & Perfect Competition
 View videos, “Monopoly Intro,” & "Is Monopoly Bad?"
 Complete handouts, “10 MR curves for most firms” & “11 Pure Monopoly stuhand 02."
 View videos, "Regulating Monopolies," "Monopolies Stepbystep," "Monopoly: the Big Review," & "Monopoly: Price Discrimination."
 Complete handouts 1216; this will take a while and you may need to view the videos above a few times.
 Compare and contrast monopoly with perfect competition by completing the handout, "17 monopoly & perfcomp."
 View the two videos on Monopolistic Competition.
 Complete handout, “18 Monopolistic Comp.”
 View the four videos on Oligopoly.
 Complete handout,” 19 Oligopoly.”
 Complete handout, “20 Market Structure Review.”
 Successfully complete Quiz/Test 04: Monopolies, Oligopolies, & Monopolistic Competition.
Module 03 Videos
Accounting vs. Econ. Costs

Fixed & Variable Costs

Cost Curves

Diminishing Returns Part 1

Diminishing Returns Part 2

Basic Market Structures

Firms' Revenue Curves

So Many Graphs?!

Profit Maximizing

MC = MR

Perf. Comp. Introduction

Perf. Comp. Graph

Perf. Comp. Loss Graph

Perf. Comp. Review Graphs

The LRATC Curve

Monopoly Intro

Is Monopoly Bad?

Regulating Monopolies

Monopoly: StepbyStep Graph

Monopoly: The Big & Quick Review

Monopoly: Price Discrimination

Monopolistic Competition: Intro

Monopolistic Competition: Graphing It

Oligopoly: A Brief Introduction

Oligopoly: Analysis with Game Theory

Oligopoly: More Game Theory

Oligopoly: Even More Game Theory

Oligopoly: Last Part on Game Theory

Module 03 Files

























