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Price theory is a field of economics that uses the supply and demand framework to explain and predict human behavior. It is associated with the Chicago School of Economics. Price theory studies competitive equilibrium in markets to yield testable hypotheses that can be rejected. Price theory is not the same as microeconomics.
Mathematically, the markup rule can be derived for a firm with price-setting power by maximizing the following expression for profit: = () where Q = quantity sold,
The implicit assumption is that the study of a one agent economy will provide useful insights into the functioning of a real world economy with many economic agents. This article pertains to the study of consumer behaviour, producer behaviour and equilibrium as a part of microeconomics. In other fields of economics, the Robinson Crusoe economy ...
Varian is the author of two bestselling textbooks: Intermediate Microeconomics, [3] an undergraduate microeconomics text, and Microeconomic Analysis, an advanced text aimed primarily at first-year graduate students in economics.
Convexity is a geometric property with a variety of applications in economics. [1] Informally, an economic phenomenon is convex when "intermediates (or combinations) are better than extremes".
or total output equals intermediate output plus final output. If we let A {\displaystyle A} be the matrix of coefficients a i j {\displaystyle a_{ij}} , x {\displaystyle \mathbf {x} } be the vector of total output, and y {\displaystyle \mathbf {y} } be the vector of final demand, then our expression for the economy becomes