Welcome to Credit Unit 3

In this Credit Unit, you will learn more about the producer. The producer, or the firm, is responsible for creating the production function or output, and is subject to various cost measures as well as the results of diminishing returns. You will explore these ideas more fully as you delve into the relationship between quantity of input and quantity of output and discuss how and why a firm’s costs may differ in the short-run versus the long-run.

This Credit Unit will introduce the concept of perfect competition, an “ideal” model that serves as a benchmark against other less “ideal” market structures. Also known as the model of “pure competition,” perfect competition results in an efficient allocation of resources. In the real world, however, unregulated markets, which are central to perfect competition, may fail to create desired outcomes for a number of reasons. Economists refer to these situations as examples of imperfect competition. You will look at one of these situation, the monopoly model.

Course Outcomes: