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

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

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-rundecisions. Producer’s surplus and profits

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

Quasi-linear Indifference preferences curves Final budget line Original budget Pivot Substitution effect=total effect

Preference and Choice Content: Preference and rationality The rule of choice Budget Demand function WAand demanded law lecture5 for Chu Kechen Honors College

Duality Given the technology, we can obtain the cost function, are the cost function contains the same information of the technology (production function)? If the answer is \yes\, then the cost minimization behavior will indicate the technology of the firm

CONTENT WA and demand law From preferences to utility Utility maximization Expenditure minimization

Aggregation and Welfare Content: Consumer's' surplus Aggregation Representation consumer

profit maximization Contain: Some definition -Isoprofit curve -Demand function and it's properties supply function and it's properties -Profit function and it's properties lecture 2 for Chu Kechen Honors College