Microeconomics: Competition in the Marketplace

Course Level 3: Advanced

Estimated Study Time: 1-2 hours

PREREQUISITES: Microeconomics: Supply, Demand, and Equilibrium, and  Microeconomics: Price and Trade.

A competitive marketplace is what provides us with the wide variety of goods we see today – from an array of budget breakfast cereals to look-alike designer clothes. A company’s desire to maximize profit and consumer’s quest for the best deal fuel an ever changing and improving marketplace. In this course you will first learn about externalities. Learn about costs, benefits, and Pigouvian taxes. When are command and control solutions appropriate? Furthermore, learn about the Coase Theorem, which states that competing firms in a disagreement should not be concerned with property rights and a winner-takes-all approach, but rather can come to a mutually beneficial solution.

Then, learn about how to maximize profits in a competitive environment. Explore when the best and worst times to enter or exit the market is, and the costs associated with these decisions. Learn about the Invisible Hand of the marketplace, which uses the market price to balance production across firms. Last, learn about monopolies. Learn how a patent allows or a temporary monopoly, and why patents can be particularly important in industries such as pharmaceuticals.

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