PART I

CHAPTER 1: 10 PRINCIPLES OF ECONOMICS

What economics is all about
- Scarcity (sự khan hiếm): the limited nature of society’s resources
- Economics: study of how society manages its scarce resources
Principle #1: People face tradeoffs (sự đánh đổi)
- All decisions involve tradeoffs
- Society faces an important tradeoff: EFFICIENCY (hiệu quả - get most from its
scarce resources) VS EQUALITY (Cân bằng - prosperity is distributed uniformly
among society’s members)
- tradeoff: to achieve greater equality. could redistribute income from wealthy to poor.
But reduces incentive to work and produce, shrinks the size of the economic “pie”.
Principle #2: The cost of something is what you give up to get it
- Making decisions requires comparing the costs and benefits of alternative choices
- The opportunity cost of any item is whatever must be given up to obtain it. (k phải
khoản chi thực)
- It is the relevant cost for decision making
Principle #3: Rational people think at the margin
- Rational people:
+ do the best they can to achieve
+ make decisions by evaluating costs and benefits of marginal changes,
incremental adjustments to an existing plan
→ Con người ra quyết định bằng so sánh chi phí và lợi ích tại cận biên
Principle #4: People respond to incentives (khích lệ)
- Incentive: induces a person to act
- Rational pp respond to incentives
Con người quyết định thực hiện 1 hành động <=> lợi ích cận biên > chi phí cận biên
Marginal Benefit (MB) > Marginal Cost (MC, MU )
Principle #5: Trade can make everyone better off
Principle #6: Markets are usually a good way to organize economic activity
- Market: a group of buyers and sellers (need not to be in a single location)
- “Organize economic activity” means determining:
+ what goods to produce
+ how to produce
+ how much of each
+ who gets them
- A market economy allocates resources through the decentralized decisions of many
households and firms as they interact in markets.
- Adam Smith (The Wealth of Nations 1776): Each of these households and firms acts
as if “led by an invisible hand” to promote general economic well-being.("Trong nền
kinh tế thị trường, các cá nhân tham gia muốn tối đa hóa lợi nhuận cho mình. Ai cũng
muốn thế cho nên vô tình chung đã thúc đẩy sự phát triển và củng cố lợi ích cho cả
cộng đồng."). It works through the price system:
 + The interaction of buyers - sellers → prices
+ Each price reflects the good’s value → buyers & cost of producing the good.
+ Prices guide self-interested households and firms to make decisions that, in
many cases, maximize society’s economic well-being
Principle #7: Governments can sometimes improve economic outcomes
- Important role: enforce property rights (police, courts)
- Pp are less inclined to work, produce, invest or purchase if large risk of their property
being stolen,
- Market failure: when the market fails to allocate society's resources efficiently (xảy
ra khi thị trường không đạt tới hiệu quả phân bổ các nguồn lực)
- Causes of market failure:
+ Externalities, when the production or consumption of a good affects
bystanders (ảnh hưởng bởi người ngoài cuộc, e.g: pollution)
+ Market power, single buyer/seller has substantial influence on market price
(monopoly)
- Public policy(chính sách công) may promote efficiency
- Govt may alter market outcome to promote equity
- If the market’s distribution of economic well-being is not desirable, tax or welfare
policies can change how the economic “pie” is divided. (Nếu sự phân bổ lợi ích kinh
tế của thị trường không được mong muốn, các chính sách về thuế hoặc phúc lợi có thể
thay đổi cách phân chia "miếng bánh" kinh tế.)
Principle #8: A country’s standard of living depends on its ability to produce Goods &
Services
- Huge variation in living standards across countries and over time:
+ Average income in rich countries is more than ten times average income in
poor countries.
+ The U.S. standard of living today is about eight times larger than 100 years
ago.
- Most impt determinant of living standards: productivity, the amount of goods/services
produced per unit of labor.
- Productivity depends on the equipment, skills, and tech available to workers
- Other factors have far less impact on LS.
Principle #9: Prices rise when the government prints too much money
- Inflation (lạm phát): increases in the general level of prices.
- In the long run, inflation is almost always caused by excessive growth in the quantity
of money, which causes the value of money to fall.
- The faster the govt creates money, the greater the inflation rate. (impt factor)
Principle #10: Society face a short-run trade-off between inflation and unemployment
- In the short-run (1-2 years), many economic policies push inflation and
unemployment in opposite directions.
- Other factors can make this tradeoff more or less favorable, but the tradeoff is always
present.
Lượng tiền tăng → Cầu về hàng hóa & dịch vụ tăng → DN tăng sx → thuê nhiều lao
động hơn → Thất nghiệp giảm
 CHAP 2: THINKING LIKE AN ECONOMIST
The Economists as Scientist
- Economists play 2 role:
1. Scientists: try to explain the world
2. Policy advisors: try to improve it
- In the first, economists employ the scientific method, the dispassionate development
and testing of theories about how the world works.
Assumptions & Models
- Assumptions simplify the complex world, make it easier to understand
- Ex: to study international trade, assume two countries and two goods. Unrealistic, but
simple to learn and gives useful insights about the real world.
- Model: a highly simplified representation of a more complicated reality. Economists
use models to study economic issues.
Our first model: The Circular-Flow Diagram (sơ đồ chu chuyển - biểu thị dòng tiền luân
chuyển thông qua các thị trường, giữa households & firms)
- The CFD: a visual model of the economy, shows how dollars flow through markets
among households and firms
- 2 types of “actors”
+ household (consumer): buy and consume G/S; own and provide FOP
+ firms (biz): manufacture and sell G/S; hire and use FOP
- 2 markets:
+ the mk for goods and services (thị trường hàng hóa và dịch vụ - households
mua/firms bán)
+ the mk for “factors of production” (thị trường yếu tố sản xuất - households
bán/firms mua)
Factors of production
- FOP: the resources the economy uses to produce G/S, including:
+ labor
+ land
+ capital (buildings & machines used in production)

→:Flow of
input/output (factor of
production,
good&services)

→:Flow of money
Second Model: The Production Possibilities Frontier (PPF-đường giới hạn khả năng sản
xuất)
- The PPF: a graph that shows the combinations of two goods TE can possibly produce
given the available resources and the available techno.
- Ex:
+ 2 goods: computers and wheat
+ 1 source: labor (measured in hours)
+ Economy has 50 000 labour hours per month available for production

The PPF: What we know so far

- Points on the PPF (A-E)
+ possible
+ efficient: all resources are fully utilized (sử dụng triệt để)
- Points under the PPF (F)
+ possible
+ not efficient: some resources underutilized (workers unemployed, factories
idle)
- Points above the PPF (G)
+ not possible (nguồn lực khan hiếm, không phải mức sản lượng nào cũng khả
thi, không đủ FOP để đáp ứng đầu ra)
 - Economic growth → PPF dịch chuyển ra phía ngoài
𝑟𝑖𝑠𝑒 (𝑐ℎ𝑖ề𝑢 𝑡ℎẳ𝑛𝑔 𝑡𝑢𝑛𝑔) △𝑦 𝑦 𝑎𝑓𝑡𝑒𝑟 − 𝑦 𝑏𝑒𝑓𝑜𝑟𝑒
SLOPE=
𝑟𝑢𝑛(𝑐ℎ𝑖ề𝑢 𝑛𝑔𝑎𝑛𝑔 ℎ𝑜à𝑛ℎ)
= △𝑥
= 𝑥 𝑎𝑓𝑡𝑒𝑟 − 𝑥 𝑏𝑒𝑓𝑜𝑟𝑒
The shape of PPF
- The PPF could be a straight line or bow-shaped
- Depends on what happens to opportunity cost as economy shifts resources frome one
industry to the other
+ If oppC remains constant, PPF is a straight line
+ If oppC of a good rises as the economy produces more of the good, PPF is
bow-shaped
+ oopC thấp → lợi thế cho quốc gia

The PPF: Summary

- The PPF shows all combinations of two goods that an economy can possibly produce,
given its resources and tech.
- PPF illustrates the concepts of tradeoff and oppC, efficiency and inefficiency,
unemployment and economic growth.
- A bow-shaped PPF illu the concept of increasing oppC
Micro and Macro
- Micro is the study of how households/firms make decisions and how they interact in
MK.
 - Macro is the study of economy-wide phenomena (hiện tượng tổng quát của nền kte),
including inflation, unemployment, economic-growth
- These 2 branches of econ are closely intertwined, yet distinct-they address diff
questions
The economist as policy advisor
- As scientists, economists make positive statements (phân tích chứng thực), which
attempt to describe the world as it is.
- As PA, economists make normative statements (phân tích chuẩn tắc), which attempt
to prescribe how the world should be.
- Positive statements can be confirmed or refuted, normative cannot.
- Govt employs many economists for PA.

CHAPTER 3
- exports
- imports
Comparative Advantage: The Driving Force of Specialization
- Absolute advantage: the ability to produce a good using fewer inputs than another
producer (time, materials)
Opportunity Cost and Comparative Advantage
- Opportunity cost: whatever must be given up to obtain some item
- Comparative advantage: the ability to produce a good at a lower opportunity cost
than another producer
Comparative Advantage and Trade
- The gains from specialization and trade are based not on absolute advantage but on
comparative advantage.
- Specializes in producing (good - comparative advantage) → total production in the
economy rises → size of the economic pie rises → better off.
- We can also view the gains from trade in terms of the price that each party pays the
other.
- Trade can benefit everyone in society because it allows people to specialize in
activities in which they have a comparative advantage
The Price of the Trade
- The principle of comparative advantage establishes that there are gains from
specialization and trade (For both parties to gain from trade, the price at which they
trade must lie between the two opportunity costs.)

PART II
CHAPTER 4: THE MARKET FORCES OF SUPPLY AND DEMAND
Markets and Competition
- A market is a group of buyers and sellers of a particular product
- A competitive market is one with many buyers and sellers, each has a negligible
effect on price.
- In a perfectly competitive market:
 + All goods exactly the same
+ B&S so numerous → no one can affect mk price - each is a “price taker” (ng
chấp nhận giá )
- In this chapter, we assume mks are perfectly competitive.
Demand
- The quantity demanded of any good is the amount of the good that buyers are willing
and able to purchase. (main factor: price)
- Law of demand: the claim the the QD falls/P rises (negative rela), other things equal
The Demand Schedule (biểu cầu)
- A table that shows the relationship between the
P
and QD
- Ex: Helen’s demand for lattes
- Notice: Helen’s preferences obey the law of D
- Đường dốc xuống nối giá bán với lượng cầu
được gọi là đường cầu.
Market Demand vs Individual Demand
- The QD = sum QD by all sellers at each prices
- Suppose Helen and Ken are the only 2 buyers in the Latte market

Demand Curve Shifters

- The D curve shows how P affects QD, other things equal- non-P determinants of D
(determine buyers; D, other than the good’s P)
- Changes in them shift the D curve
- Gần gốc tọa độ hơn → nhỏ hơn
Factors affect on Demand
1. # of Buyers
2. Income
- (+) normal good: D → right
Ex: D giảm, Q giảm
- (-) inferior good: D → left
Ex: D tăng, I giảm
3. Price of related goods
- (+) substitute (thay thế) → right
Ex: áo len/ áo nỉ, vé phim/đĩa phim, xúc xích/bánh mì kẹp
- (-) complement (bổ trợ) → left: giá của hàng hóa này giảm làm tăng cầu của hàng hóa
khác
- Ex: xăng/ô tô, máy tính/phần mềm
4. Tastes → right
5. Expectations
Supply
- QS of any good is the amount that sellers are willing/able to sell
- Law of S: the QS rises/ P rises, other things equal.
The supply Schedule
- A table shows rela between P and QS
- Notice: Stb supply schedule obeys the LOS
Market Supply vs Individual Supply

- The QS = sum QS by all sellers at each prices

- Suppose Stb and Jitters are the only 2 sellers in this mk
Supply Curve shifters
- Shows P affects QS, other equals ( non-P det of S)
- Changes in them shift the S curve
Factors affect on Supply
1. # of sellers → curve to the right
2. Input Prices: wages, prices of raw materials
- Input prices fall → production more profitable → supply rises → right
3. Technology
- How much inputs are required to produce a unit of output
 - A cost-saving technological improvement has the same effect as a fall in input prices
→ right
4. Expectations
- kỳ vọng giá của sản phẩm sẽ cao trong tương lai → dự trữ → supply fall → left
Supply and Demand together

- Eq = when Q and D met

Three steps to analyzing changes in Eq’m

1. Decide whether event shifts S, D curve, or both
2. Decide in which direction curve shifts
3. Use supply-demand diagram to see how the shift changes eq’m P and Q
CHAP 5: Elasticity and its application
Elasticity (Độ co giãn)0
- Basic idea: Elasticity measures how much one variable responds to changes in another
variable. (đo phản ứng của các biến trước thay đổi của đk thị trường)
+ 1 type of elas measures how much D for your websites will fall if you raise P
- Definition: Elas is a numerical measure of the responsiveness of QD or QS to one of
its det.
[Link] Elasticity of Demand (độ nhạy cảm với giá)

- Measures how much QD responds to a change in P

- Measures the price-sensitivity of buyers’ demand

Calculating Percentage Changes

- So, we instead use the midpoint method:
𝐸𝑛𝑑 𝑣𝑎𝑙𝑢𝑒 − 𝑠𝑡𝑎𝑟𝑡 𝑣𝑎𝑙𝑢𝑒
%= 𝑚𝑖𝑑𝑝𝑜𝑖𝑛𝑡
× 100%
Determinant of ED depends on:
- The extent to which close substitutes are available
- whether the good is a necessity/luxury
- how broadly/narrowly the good is defined
- the time horizon (long>short)
The variety of Demand Curves
- The PE of D is closely related to the slope of DC
- Rule of thumb:
+ The flatter (phẳng) the curve, the bigger the E
+ The steeper (dốc) the curve, the smaller the E
- Five different classifications of D curves
PE and TR
- REVENUE = PxQ
- P increase → 2 effects on TR:
+ P rise, TR rise
+ P rise, Q fall (LOD) ⇒ TR fall
1. ED <1: Inelastic Demand
- % change Q < % change P
- P rise then TR rise (TR>Q)
2. ED>1: Elastic Demand
- % change Q > % change P
- P rise then TR fall (TR<Q)
[Link] of S

- PE of S measures how much Qs responds to a change in P (sellers’ price-sensitivity)

The variety of SC
- The slope of SC is related to PE of S
- Rule of thumb:
+the flatter, the bigger E
+the steeper, the smaller E
- 5 different classifications…
The Det of SE
- Quantity of good (more easily to change → greater price Es)
- Time horizon (long>short because firms can build new factories or new firms may be
able to enter the mk)

CHAPTER 6: SUPPLY, DEMAND AND GOVERNMENT POLICIES

Gvt policies that alter the private market outcome
- Price controls
+ price ceiling (giá trần): maximum price → shortage
+ price floor (giá sàn): minimum price → surplus
- Taxes: The govt can make buyers or sellers pay a specific amount on each unit
Shortages and rationing
- With shortages, sellers must ration the goods among buyers:
+ Long lines (xếp hàng)
+ Discrimination according to sellers’ biases (dựa trên bias của seller)
→ often unfair, and inefficient: the goods do not necessarily go to the buyes who
value them most highly
- In contrast, when P are not controlled → rationing mechanism if efficient
The minimum wage
- Min wage laws do not affect highly skilled workers
- Do affect teen workers
- Studies: A 10% increase in the min wage raises teen unemployment by 1-3%
Evaluating price controls
- Recall a principle: Markets are usually a good way to organize economic activity
- prices are signals that guide the allocation of society’s resources. (altered when
policymakers restrict prices)
- price controls often intended to help the poor, but often hurt more than help.
Taxes
- The govt levies taxes on many G/S to raise Revenue → pay for nation
- The govt can make buyers or sellers pay tax
- Can be a % of the good’s price, specific amount for each unit sold (per-unit tax)
- Tax incidence (phạm vi ảnh hưởng của thuế): how the burden of a tax is shared among
market participants
The incidence of a tax

THE OUTCOMES IS THE SAME IN BOTH CASES!

- The effects on P and Q, and the tax incidence are the same whether the tax is imposed
on buyers or sellers
Elasticity and tax incidence
CASE 1: ES > ED (easier for sellers to leave the mk → buyers bear most of the burden)
CASE 2: ES < ED (easier for buyers to leave the mk → sellers bear most of the burden)

PART 3: WELFARE ECONOMICS (MARKET EFFICIENT)

CHAP 7: Consumers, Producers, and the efficiency of markets
Welfare Economics
- Recall, the allocation of resources:
+ how much of each goods idd produced
+ which producers produce it
+ which consumers consume it
- Welfare economics studies how the allocation of resources affects economic
well-being
- First, we look at the well-being of consumers
Willingness to pay (WTP)
- WTP for a good is the max amount buyers pay
- WTP measures how much the buyer values the good
- Demand curve = WTP
Consumer Surplus (CS): CS = WTP - P
Cost and the Supply Curve
- Cost is the value of everything a seller must give up to produce (resources, time)
- measure of willingness to sell
Producer Surplus: PS = P - cost

Total Surplus: total gains from trade in a mk

TS = CS + PS = (WTP - P) + (P - cost) = WTP - cost
Efficiency: An allocation of resources is efficient if it maximizes TS. Efficiency means:
- The goods are consumed by the buyers who value them most highly ( highest WTP)
- The goods are produced by the producer with the lowest cost
- Raising or lowering the Q of good would not increase total surplus
Evaluating the Market Equilibrium
 PART 4: FIRM BEHAVIOR
CHAPTER 13: The costs of production
TR, TC, Profit
- The firm’s goal → maximize profit
Profit = TR - TC = (P - ATC) x Q
- TR (tổng doanh thu)= amount receives from the sale of output
- TC (tổng chi phí)= mk value of inputs a firm uses in production
Costs: Explicit vs Implicit (chi phí sổ sách vs chi phí ẩn)
- ExC: require an outlay of money (chi phí đầu vào phải bỏ tiền ra để chi trả, ex: lương)
- ImC: do not require a cash outlay (không đòi hỏi phải chi tiền, ex: the oppC of time)
- Principle: The cost of something is what u give up to get it
→ true whether both
Economic Profit vs Accounting Profit (Lợi nhuận kinh tế và lợi nhuận kế toán)
- EC = TR - TC (ex, im)
- AP = TR - Total ExC
- AP ignores implicit costs → higher than EX
The Production Function (Hàm sản xuất)
- shows the rela between the Q of inputs used to produce a good and the Q of output of
that good
- it can be presented by a table,
equation, graph
- Ex:
+ Farmer Jack grows wheat
+ He has 5 acres of land
+ He can hire as many workers
as he want

Marginal Product
- If Jack hires one more worker, his output rises by the marginal product of labor
- MP of any input is the increase in output arising from an additional unit of that input,
holding all other inputs constant.
- Notation: deltaQ = change in output, delta L = change in labor
△𝑄
- MP of labor =
△𝐿
Why MPL is important
- Rational people think at the margin
- When Jack hires an extra worker
+ his costs rise by the wage he pays the worker
+ his output rises by MPL
Why MPL diminishes
- In general, MPL diminishes as L rises whether the fixed input is land or capital
- Diminishing marginal product: the MP of an input declines as the Q of the input
increases (sản lượng biên giảm khi lượng đầu vào tăng)
∆𝑇𝐶
Marginal cost (MC): is the increase in TotalC from producing one more unit → MC =
∆𝑄
Fixed costs (FC-chi phí cố định): do not vary with the Q of output produced (không đổi theo
sản lượng, ex: equipment, loan, rent)

Variable cost (VC-chi phí biến đổi): vary with the quantity produced (cost of materials)
Total cost = FC + VC
Why ATC is usually U-shaped: As Q rises:
- falling AFC → pull ATC down
- rising AVC → pull ATC up
- Efficient scale (quy mô hiệu quả): the Q that minimizes ATC
ATC and MC
- MC < ATC → ATC fall
- MC >ATC → ATC rise
- The MC curve crossed the ATC curve at the ATC curve’s minimum (output low →
MC under ATC → ATC declines)
- ATC lowest sẽ đóng vai trò then chốt khi phân tích hoạt động của firm cạnh tranh)
Costs in the Short-run & Long-run
- Short: Some inputs are fixed, the cost are FC
- Long: All inputs are variable
- In the long, ATC at any Q is cost per unit using the most efficient mix of inputs for
that Q
How ATC changes as the scale of production changes
- Economies of scale (lợi thế kinh tế theo quy mô): Q tăng → ATC giảm (occur when
increasing production allows greater specialization)
 - Constant returns to scale(lợi thế không đổi theo quy mô): Qchange → ATC same
- Diseconomies of scale(bất lợi thế kinh tế theo quy mô): Q tăng → ATC tăng
(coordination)
Đường chi phí điển hình:
- Sản lượng đầu ra tăng → MC tăng
- ATC U-shaped
- MC cross ATC at the lowest point of ATC
CHAP 14: Firms in Competitive Markets
Characteristics of Perfect competition
1. Many buyers/sellers
2. The good offered for sale are largely the same
3. Firms can freely enter or exit the market
- No barriers to entry the mk (tự do gia nhập và rời khỏi)
The Revenue of a Competitive Firm
TR = P x Q
𝑇𝑅
Average revenue: AR = P = 𝑄
∆𝑇𝑅
Marginal revenue: MR = ∆𝑄
(the change in TR from selling 1 more unit)
MR = P is only true for firms in CM
Profit Maximization
- What Q maximizes the firm’s profit ? To find the answer, “think at the margin”
If increase Q by 1 unit, revenue rises by MR, cost rises by MC
- MR>MC → increase Q to raise prf
- MR<MC → reduce Q to raise prf
- Qmax → MC=MR
MC and the Firm’s Supply Decision
- Rule: MR=MC at the profit-maximizing Q
- The MC curve is the firm’s supply curve
Shutdown vs Exit
- Shutdown: A short-run decision not to produce anything because of market conditions
- Exit: A long-run decision to leave the mk
- A key difference:
+ Shut in SR, still pay FC
+ Exit in LR, 0 costs
A firm’s Short-run Decision to Shut
- Cost: revenue loss = TR
- Benefit: cost savings = VC ( firm must still pay FC)
- Shut down if TR < VC
- Divide both sides by Q: TR/Q < VC/Q
- So, firm’s decision rule: shut down if P < AVC
The Irrelevance of Sunk Costs
- Sunk cost (chi phí chìm): already been committed and cannot be recovered
- should be irrelevant to decisions, must pay regardless of choice
 - FC is SC: The firm must pay FC (produces/shutdown)
→ FC should not matter in decision to Shut
A Firm’s LR Decision to Exit
- Cost: revenue loss = TR
- Benefit: cost savings = TC (0 FC in LR)
- Exit if TR < TC
- Rule: Exif if P < ATC
- Đường cung của LR firm là MC nằm trên ATC
A New Firm’s decision to Enter MK
- In LR, new firm will enter the mk if it is profitable to do so: if TR > TC = P > ATC
Market Supply: Assumptions
1. All existing firms and potential entrants have identical cost
2. Each firm’s costs do not change as other firms enter/exit
3. The number of firms in the mk:
- fixed in SR (due to FC)
- variable in LR (due to free entry/exit)
The SR Market Supply Curve
- P ≥ AVC → produce Qmax (MR=MC)
- At each price, Qs = Qs of all firms

Entry & Exit in LR

- In LR, the # of firms can change due to entry & exit
- If existing firms earn positive economic profit
+ new firms enter → SR market supply shifts right
+ P falls, reducing profits / slowing entry
- If existing firms incur losses
+ exit → shift left
+ P rises → reduce losses
The Zero-Profit Condition
- Long-run Equilibrium: The process of entry or exit is complete - remaining firms earn
0 economic prf
 - 0 Epft occurs when P = ATC
- Firms produce where P=MR=MC, th 0 prf condition is P=MC=ATC
- MC intersects ATC at ATCmin
→ in LR, P=minATC
Why do firms stay in biz if Profit=0?
- In the 0-pft equilibrium:
+ firms earn enough revenue to cover costs
+ accounting profit is positive
The LR market Supply Curve *

SR & LR Effects of an Increase in D*

Why the LR supply curve might slope upward

- The LR market supply curve is horizontal if
1. all firms have identical costs
Firms have different costs:
- As P rises, firms with lower costs enter the mk before those with
higher costs
- Further increases in P make it worthwhile for higher-cost firms to enter
the mk, increases mk Qs
→ LR mk S curve slopes up
- At any P
+ For the marginal firm, P = ATC min and profit = 0
+ For lower-cost firms, profit > 0
2. costs do not change as other firms enter or exit
Cost rise as Firms enter the mk
- In some industries, the S of a key input is limited (amount of land
suitable for farming is fixed)
- The entry of new firms increases D for input, causing its price to rise.
- This increases all firms’ costs
 → an increase in P is required to increase th mk Qs → S curve
up-sloping
- If neither of these assumptions (giả định) is not true , then LR supply curve slopes up
Conclusion
- Profit-maximization: MC=MR
- Perfect competition: P=MR
- So, in the competitive eq’m: P=MC
- MC is cost of producing the marginal unit. P is value to buyers of the marginal unit.