Costs and the Law of Supply
the first time you go through each of these topics you should click on
the following items in sequence.
to the lecture
a quick quiz
|This topic takes
us from the theory of consumer behaviour to the first part of our study
of producer behaviour, that is, how typical firms determine their output
and, ultimately, the supply of a product entering the market.
To introduce the different types
of business enterprise ("firms"), with particular attention to the modern
To explain why the term "cost"
as used in economic theory is more broadly conceived than might be expected
from our everyday use of the term
To develop the principle of
diminishing returns and relate it to historical expectations of human "progress"
To show how the physical principle
of diminishing returns translates into a theory of how a firm's costs change
as output is increased
To explore the implications
of the behaviour of long-run costs of the firm for maintenance of competition