EJC_H2Econs_Topic6

How to use this set of lecture notes? 1) BEFORE LECTURES – UNDERSTANDING CONTENT - Reference your notes against your H2 syllabus. Mark out the key concepts so that you know what you MUST know - Read your notes ahead so that you can focus on listening and capturing additional notes during lectures 2) During lectures – APPLYING CONTENT - Bring your hard copy notes along, and use your PLDs to refer to the lecture slides concurrently - Capture additional notes, especially the real-world examples where you can note down how concepts are applied and how economic analysis are developed in varying contexts - You should make use of a notetaking/consolidation tool to take notes during lessons and to consolidate your learning at timely junctures. Examples are M iro, Notion, Goodnotes, Notability, Microsoft OneNote, KAMI, etc. The choice is yours! 3) After Lectures – TUTORIAL PREPARATION to use content flexibly to show application, analysis and evaluation skills - Revise concepts relevant for the case study and essay questions - Refer to the notes and use it flexibly to prepare your answers to meet question requirements. Pure memorisation will not work as it does not involve deep understanding. - Do share your notes with your friends to multiply learning!

Essential Questions: 1. What decisions do firms make? 2. How do firms make decisions? 3. What are the impacts of firm’s decisions? Introduction to Objectives of Firms; Cost and Revenue 1. Objectives of Firms 1.1 Profit-maximisation (Traditional) 1.2 Alternative Objectives (Non-traditional) 2. Economic Profit and Production Costs 2.1 Types of Economic Profit 3. 3.1 3.2 Short-run Production and Costs Short-run Costs Marginal Cost (MC) [NOTE these 3 cost concepts: Total Cost (TC), Average Cost (AC) and Marginal Cost (MC)] 4. 4.1 4.2 4.3 4.4 4.5 Long-run Production and Costs Returns to Scale Long-run Average Cost (LRAC) for substantial IEOS Long-run Average Cost (LRAC) for limited IEOS Internal Economies and Diseconomies of Scale External Economies and Diseconomies of Scale 5. Firms’ Revenue Curves 5.1 5.2 Revenue Curves for Price-taking Firms Revenue Curves for Price-setting Firms [NOTE these 3 revenue concepts: Total Revenue (TR), Average Revenue (AR) and Marginal Revenue (MR)] 6. Profit-Maximisation Condition (MC = MR), Price, Output, Level of Profits 6.1 6.2 Price-taking Firms Price-setting Firms 7. Shut-down Conditions Annex CONTENTS

Introduction to Objectives of Firms; Cost and Revenue From the market forces of demand and supply, the remaining Microeconomic topics examine the producer behaviour in greater depth from a firm’s perspective. We will deepen our understanding of how a firm makes rational decisions to achieve its objective(s). This topic will reveal the various objectives of the firm and how a firm’s cost of production and revenue is affected when its production increases. You mig