Unit 3: The Theory of the Firm

Students will know explicit and implicit costs, accounting and economic profit, normal profit, short-run and long-run costs, fixed cost, variable cost, total cost, average cost, marginal cost, diminishing marginal returns, economies and diseconomies of scale, and the characteristics and outcomes of perfect competition, monopoly, monopolistic competition, and oligopoly.

Students will calculate production costs, graph cost curves, determine profit-maximizing output, compare market structures, analyze efficiency, apply the MR = MC rule, and evaluate firm behavior in competitive and imperfectly competitive markets.

Students will demonstrate understanding through cost calculations, graph interpretation, class activities, market-structure comparisons, written explanations, quizzes, and unit-level assessment.