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Economic theory

Firms and competition

Costs, profit, and what changes when a market has one seller rather than many.

Start: Fixed and variable costs

The 11 modules

Each module teaches one idea: a definition, how it works, and questions through the page. Take them in any order.

1Fixed and variable costsSort a cost into fixed or variableTell them apart · 6 min · Free 2Average and marginal costWork out average and marginal cost from a total cost tableCalculation · 7 min 3Economies of scaleSay what economies of scale are and name their sourcesConcept · 7 min 4Total, average and marginal revenueWork out the three revenue measures from a demand scheduleCalculation · 7 min 5Normal and supernormal profitTell normal profit from supernormal profitTell them apart · 6 min 6Perfect competitionSay what makes a market perfectly competitiveConcept · 7 min 7How a monopoly formsName the barriers to entry that create a monopolyConcept · 7 min 8Monopolistic competition and oligopolyTell the four market structures apartTell them apart · 6 min 9Price discriminationSay what price discrimination is and what it needs to workConcept · 7 min 10Why a firm growsTell organic growth from a merger, and horizontal from verticalTell them apart · 6 min 11Is competition policy worth it?Weigh the case each way on breaking up a large firmDebate · 6 min