FIrms

Microeconomic Analysis

References

Hal Varian: Chapter 19, 20 

Colab Notebooks

  • Profit Maximization

Overview

  • Like consumers, firms
    • Make choices
    • Face constraints
    • Behave as if they are maximizing 
  • What to produce
  • How to produce
  • What price to sell at
  • Technologically Feasible
  • Environmentally Feasible
  • Short Run Variable
  • Maximize Profit
  • Maximize Market Share

From a modeling perspective, what is the significant difference between consumers and firms?

Inputs

Outputs

Labor

Land

Financial

Capital

Production

Process

Product

Waste

Physical

Capital

\underset{x \in \mathcal{X}}{\textrm{maximize}} \ \textrm{Profit}(x)
\underset{y \in \mathcal{Y}}{\textrm{maximize}} \ \textrm{Profit}(y)