The Concept of Investment For a one period investment, the ROR can be evaluated each year. For investments that generate returns in many periods, there are two ways of describing the rate of return

Structure Types of cost curves – Fixed, variable and total cost functions – Average fixed, average variable and average cost functions Marginal cost functions Marginal and variable cost functions Marginal and average cost functions Short run and long run cost curves

Structure Market supply Short-run supply and equilibrium Long-run supply and equilibrium Long-run implications for taxation Fixed inputs and economic rent (经济租金)

How Should a Monopoly Price? So far a monopoly has been thought of as a firm which has to sell its product at the same price to every customer. This is uniform pricing. Can price-discrimination （差别定价 ）earn a monopoly higher profits?

Contents Dominant strategy Nash equilibrium Prisoner’s dilemma and repeated games Multiple equilibria and sequential games Pure and mixed strategies

Now Add Production ... Add input markets, output markets, describe firms’ technologies, the distributions of firms’ outputs and profits … That’s not easy!

Structure Definition When to provide a public good – Efficient provision – Private provision: free-riding Variable quantities of public good – Efficient amount – Free-riding problem How to provide public goods? Demand revelation

Revealed Preference Analysis Suppose we observe the demands (consumption choices) that a consumer makes for different budgets. This reveals information about the consumer’s preferences. We can use this information to

Contents Describe preferences Indifference curves Well-behaved preferences Marginal rate of substitution

Contents Describe budget constraint –Algebra –Graph Describe changes in budget constraint Government programs and budget constraints Non-linear budget lines