(BQ) Part 2 book "Economics" has contents: Elasticity, production and costs, perfect competition, government and product markets - antitrust and regulation; the distribution of income and poverty, international trade, international finance, globalization and international impacts on the economy,.and other contents. | To download more slides, ebooks, solution manual, and test bank, visit © EMIN KULIYEV/SHUTTERSTOCK Chapter ELASTICITY Introduction In New York City, a Broadway play is performed in a theater with 1,500 seats. Will the play take in more revenue if the average ticket price for a performance is $70 or if it is $120? If you said $120, consider some other questions: Will the play take in more revenue if the average price is $120 or $180? Will it take in more revenue if the average price is $180 or $250? Are you beginning to get suspicious? Perhaps the highest ticket price won’t generate the greatest amount of revenue, but then which ticket price will. The answer may surprise you. As we begin our discussion of microeconomics, we need to take some time to discuss what microeconomics is about and how best to study it. HOW TO APPROACH THE STUDY OF MICROECONOMICS Microeconomics is the branch of economics that deals with human behavior and choices as they relate to relatively small units: an individual, a firm, an industry, a single market. Microeconomics involves some key players—players we see time and again. These are: 1. consumers, 2. business firms, and 3. factor (or resource) owners. Each of these three microeconomic players has an objective (or goal), faces some constraints, and has to make choices. In a way, all of microeconomics is really about: 1. objectives, 2. constraints, and 3. choices. Let’s discuss the three players in terms of their objectives, constraints, and choices. 375 To download more slides, ebooks, solution manual, and test bank, visit 376 PA R T 6 Microeconomic Fundamentals Consumers Consumers buy goods and services produced by firms, thereby advancing their objective of trying to maximize their utility or satisfaction. Yet very few people can buy all the goods they might like to consume. Consumers’ purchases are constrained by their limited incomes and by the positive
