ECON

Optimization principle: People try to choose the best patterns of consumption that they can afford The equilibrium principle: Prices adjust until the amount that people demand of something is equal to the amount that is supplied Competetive market: Demand curve & Supply curve  Market equilibrium P* Monopoly  Normal monopolist: Picks prices with biggest revenue box (fig 1.7 p13) (Discriminating monopolist: different prices) Excess demand (Pmax )e.g. : rent control. Pareto improvemen...