Overview
The microeconomic foundations of pricing are essential for understanding how prices are determined in various market structures. By analyzing supply and demand, firms can set prices that maximize their profits while considering consumer behavior and market competition. Different market structures, s...
Key Terms
Example: The supply of oranges increases during the harvest season.
Example: The demand for electric cars has risen due to environmental concerns.
Example: The equilibrium price for coffee is determined where supply meets demand.
Example: If the price of a product increases by 10% and demand decreases by 20%, the elasticity is -2.
Example: If a consumer is willing to pay $50 for a shirt but buys it for $30, their consumer surplus is $20.
Example: Agricultural markets often exhibit perfect competition.