Unit 3: Markets and Individual Maximizing Behavior
In this unit, we examine how markets increase overall welfare via the concepts of consumer and producer surplus. We explore how the concepts of marginal costs and benefits affect a company's decision to make one more, or one less, product.
We have already learned that, at its most fundamental level, microeconomics is the study of how we make decisions. To expand on this point, we need to distinguish between the either/or and how much decision. 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.
This unit concludes with the causes and ramifications of income inequality. While there is much debate about how to address long-term inequality, economists can objectively measure the problem's scope and offer options to manage this economic phenomenon. Protracted poverty and inequality can cause long-term harm to an economy's development.
Completing this unit should take you approximately 8 hours.
3.1: Maximizing in the Market Place
3.2: When Markets Fail
3.3: Income Inequality