1. Models of company behavior
1.1. Some economists have adopted a "behavioral" approach to studying the decisions of companies. Business
1.1.1. have adopted a “holistic” approach, which considers that, for decision-making
1.1.1.1. the company is a single unit and therefore avoids complex Issues of the behavior of factor providers in their relationships
2. Profit maximization
2.1. Most bidding models assume that the company and its manager pursue the goal of making as much financial profit as possible.
2.2. Profit-maximizing company
2.2.1. A profit maximizing company chooses its factors and their products for the sole purpose of obtaining the maximum amount of profit possible
2.2.1.1. In other words, the company will try to make the difference between its total income and its total costs as large as possible.
2.3. Profit maximization and marginalism
2.3.1. The entrepreneur, conceptually, will experience adjustments of those variables that he can control, up to the point where it would be impossible to further increase profits.
2.3.1.1. As long as these increasing profits are positive, it will produce the additional unit or hire the additional worker.
2.4. Choice of production
2.4.1. what level of production a company will choose in order to obtain the maximum profit.
2.4.1.1. na empresa vende determinado nivel de producción, q, a un precio de mercado de p por unidad.
3. Marginal income
3.1. if the company's decisions regarding production are not affect the market price, the marginal revenue will be equal to the price at which that unit sells.
3.1.1. If the demand curve for your products slopes downward, only you will be able to sell more production if you reduce the price of the good
3.1.1.1. If the demand curve for your products slopes downward, only you will be able to sell more production if you reduce the price of the good
4. Profit maximization decision
4.1. The market price is determined by P *
4.1.1. the demand curve for the firm's product is a straight line horizontal passing through P *
4.1.1.1. Therefore, to maximize profits it is necessary that P = CMg and also that the marginal cost is increasing at this point.
5. Earning functions
5.1. This function shows that the company's (maximized) profits depend exclusively on the prices of its products.
5.2. Properties
5.2.1. Homogeneity
5.2.2. The profit functions are not decreasing for the price of the product
5.2.3. The profit functions are not increasing for factor prices
5.2.4. The profit functions are convex for product prices
6. Nature and behavior of companies
6.1. Different individuals will contribute different types of factors, such as worker skills and various capital teams
6.1.1. with the expectation of receiving some kind reward for doing so.
7. Contractual relationships within companies
7.1. Each supplier agrees to dedicate its factor to productive activities according to with a number of insights into how it will be used and the benefit you hope to get from your utilization
7.1.1. workers negotiate to balance their hours
7.1.1.1. In the case of workers, there are numerous implicit understandings of how they will share tasks
7.1.2. Capital owners invest in a company in accordance with a set of explicit legal principles
7.1.2.1. these formal agreements, many of the agreements between the company and its suppliers of factors of production are implicit
7.1.2.2. the owners of capital can delegate much of their authority to managers and workers to have them make these decisions on your behalf
7.1.3. All these explicit and implicit relationships vary in the presence of experiences and events outside the company
8. Marginal revenue curve
8.1. Every demand curve has a corresponding marginal revenue curve
8.2. average income curve
8.2.1. the demand curve shows the income per unit produced by different production alternatives.
8.2.2. shows the additional revenue provided by the last unit sold
9. The firm's short-run supply curve
9.1. upward sloping is the short-term supply curve for this price taker firm.
9.1.1. This curve shows how much the company will produce at each of the possible market prices.