Structure Market environments Market demand for a competitive firm Short-run- supply decision Upward sloping MC curve Shut- down condition Long -run- supply decision Comparing long-run- and short--run decisions Producer's' surplus and profits
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
Effects of a Price Change What happens when a commodity's price decreases? Substitution effect(替代效应):the commodity is relatively cheaper, so consumers substitute it for now relatively more expensive other commodities