(1) Intro to Firm Behavior, Profit Maximization, and Production
Firm Behavior, Profits, Profit Maximization
This begins the discussion of firm behavior. It sets the stage for later discussion of production and cost, by noting that these concepts underly the supply curve that has been previously developed. It explains that firms are assumed to maximize profits, and then discusses the definition and role of profits in an economy.
Crane, Steven E., "(1) Intro to Firm Behavior, Profit Maximization, and Production" (2011). Principles of Microeconomics. Paper 35.
Ability to explain the profit maximizing motivational assumption for firms, and why it is related to supply. Ability to explain the profit equation, and the role of profits in a market economy. Ability to explain why profits are a "residual."
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