{"id":467,"date":"2010-11-23T08:43:22","date_gmt":"2010-11-23T14:43:22","guid":{"rendered":"http:\/\/opengecko.com\/economics\/ib-economics\/microeconomics\/2-3-theory-of-the-firm\/"},"modified":"2011-03-08T08:03:27","modified_gmt":"2011-03-08T14:03:27","slug":"2-3-theory-of-the-firm","status":"publish","type":"page","link":"https:\/\/opengecko.com\/geckoview\/economics\/ib-economics\/microeconomics\/2-3-theory-of-the-firm\/","title":{"rendered":"2.3 Theory of the Firm"},"content":{"rendered":"

This is a Higher Level topic only.<\/u><\/strong><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Cost theory<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Types of costs: fixed costs, variable costs (distinction between short-run and long-run)<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Total, average and marginal costs<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Accounting cost + opportunity cost = economic cost<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 Short-run<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Law of diminishing returns<\/td>\n1<\/td>\nhttp:\/\/opengecko.com\/economics\/output-or-product-in-the-short-run\/<\/a><\/td>\n<\/tr>\n
Total product, average product, marginal product<\/td>\n1<\/td>\nhttp:\/\/opengecko.com\/economics\/output-or-product-in-the-short-run\/<\/a><\/td>\n<\/tr>\n
Short-run cost curves<\/td>\n2<\/td>\nhttp:\/\/opengecko.com\/economics\/short-run-cost-curves\/<\/a><\/td>\n<\/tr>\n
Long-run<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Economies of scale<\/td>\n <\/td>\nhttp:\/\/opengecko.com\/economics\/the-long-run-cost-curves-economies-and-diseconomies\/<\/a><\/td>\n<\/tr>\n
Diseconomies of scale<\/td>\n <\/td>\nhttp:\/\/opengecko.com\/economics\/the-long-run-cost-curves-economies-and-diseconomies\/<\/a><\/td>\n<\/tr>\n
Long-run cost curves<\/td>\n <\/td>\nhttp:\/\/opengecko.com\/economics\/the-long-run-cost-curves-economies-and-diseconomies\/<\/a><\/td>\n<\/tr>\n
Revenues<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Total revenue<\/td>\n3<\/td>\nhttp:\/\/opengecko.com\/economics\/revenues-total-marginal-and-average\/<\/a><\/td>\n<\/tr>\n
Marginal revenue<\/td>\n3<\/td>\nhttp:\/\/opengecko.com\/economics\/revenues-total-marginal-and-average\/<\/a><\/td>\n<\/tr>\n
Average revenue<\/td>\n3<\/td>\nhttp:\/\/opengecko.com\/economics\/revenues-total-marginal-and-average\/<\/a><\/td>\n<\/tr>\n
Profit<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Distinction between normal (zero) and supernormal (abnormal) profit<\/td>\n4<\/td>\nhttp:\/\/opengecko.com\/economics\/profit\/<\/a><\/td>\n<\/tr>\n
Profit maximization in terms of total revenue and total costs, and in terms of marginal
revenue and marginal cost<\/td>\n		4<\/td>\nhttp:\/\/opengecko.com\/economics\/profit\/<\/a><\/td>\n<\/tr>\n
Profit maximization assumed to be the main goal of firms but other goals exist (sales volume maximization, revenue maximization, environmental concerns)<\/td>\n4<\/td>\nhttp:\/\/opengecko.com\/economics\/profit\/<\/a><\/td>\n<\/tr>\n
Perfect competition<\/strong><\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Assumptions of the model<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Demand curve facing the industry and the firm in perfect competition<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Profit-maximizing level of output and price in the short-run and long-run<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
The possibility of abnormal profits\/losses in the short-run and normal profits in the long-run<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Shut-down price, break-even price<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Definitions of allocative and productive (technical) efficiency<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Efficiency in perfect competition<\/td>\n6<\/td>\nhttp:\/\/opengecko.com\/economics\/perfect-competition\/<\/a><\/td>\n<\/tr>\n
Monopoly<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Assumptions of the model<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Sources of monopoly power\/barriers to entry<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Natural monopoly<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Demand curve facing the monopolist<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Profit-maximizing level of output<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Advantages and disadvantages of monopoly in comparison with perfect competition<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Efficiency in monopoly<\/td>\n7<\/td>\nhttp:\/\/opengecko.com\/economics\/monopoly\/<\/a><\/td>\n<\/tr>\n
Monopolistic competition<\/strong><\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Assumptions of the model<\/td>\n8<\/td>\nhttp:\/\/opengecko.com\/economics\/monopolistic-competition\/<\/a><\/td>\n<\/tr>\n
Short-run and long-run equilibrium<\/td>\n8<\/td>\nhttp:\/\/opengecko.com\/economics\/monopolistic-competition\/<\/a><\/td>\n<\/tr>\n
Product differentiation<\/td>\n8<\/td>\nhttp:\/\/opengecko.com\/economics\/monopolistic-competition\/<\/a><\/td>\n<\/tr>\n
Efficiency in monopolistic competition<\/td>\n8<\/td>\nhttp:\/\/opengecko.com\/economics\/monopolistic-competition\/<\/a><\/td>\n<\/tr>\n
Oligopoly<\/strong><\/td>\n<\/font><\/td>\n <\/td>\n<\/tr>\n
Assumptions of the model<\/td>\n9<\/td>\nhttp:\/\/opengecko.com\/economics\/oligopoly\/<\/a><\/td>\n<\/tr>\n
Collusive and non-collusive oligopoly<\/td>\n9<\/td>\nhttp:\/\/opengecko.com\/economics\/oligopoly\/<\/a><\/td>\n<\/tr>\n
Cartels<\/td>\n9<\/td>\nhttp:\/\/opengecko.com\/economics\/oligopoly\/<\/a><\/td>\n<\/tr>\n
Kinked demand curve as one model to describe interdependent behaviour<\/td>\n9<\/td>\nhttp:\/\/opengecko.com\/economics\/oligopoly\/<\/a><\/td>\n<\/tr>\n
Importance of non-price competition<\/td>\n9<\/td>\nhttp:\/\/opengecko.com\/economics\/oligopoly\/<\/a><\/td>\n<\/tr>\n
Theory of contestable markets<\/td>\n9<\/td>\nhttp:\/\/opengecko.com\/economics\/oligopoly\/<\/a><\/td>\n<\/tr>\n
Price discrimination<\/strong><\/td>\n<\/font><\/td>\n <\/td>\n<\/tr>\n
Definition<\/td>\n10<\/td>\nhttp:\/\/opengecko.com\/economics\/price-discrimination\/<\/a><\/td>\n<\/tr>\n
Reasons for price discrimination<\/td>\n10<\/td>\nhttp:\/\/opengecko.com\/economics\/price-discrimination\/<\/a><\/td>\n<\/tr>\n
Necessary conditions for the practice of price discrimination<\/td>\n10<\/td>\nhttp:\/\/opengecko.com\/economics\/price-discrimination\/<\/a><\/td>\n<\/tr>\n
Possible advantages to either the producer or the consumer<\/td>\n10<\/td>\nhttp:\/\/opengecko.com\/economics\/price-discrimination\/<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

This is a Higher Level topic only. Cost theory     Types of costs: fixed costs, variable costs (distinction between short-run and long-run)     Total, average and marginal costs     Accounting cost + opportunity cost = economic cost      Short-run     Law of diminishing returns 1 http:\/\/opengecko.com\/economics\/output-or-product-in-the-short-run\/ Total product, average product,…<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":182,"menu_order":3,"comment_status":"open","ping_status":"open","template":"","meta":{"footnotes":""},"tags":[],"class_list":["post-467","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/pages\/467","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/comments?post=467"}],"version-history":[{"count":10,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/pages\/467\/revisions"}],"predecessor-version":[{"id":691,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/pages\/467\/revisions\/691"}],"up":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/pages\/182"}],"wp:attachment":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/media?parent=467"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/tags?post=467"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}