Note: This is post #41 in a weekly video series on basic microeconomics.
We tend to assume profit—the bottom line—is the main motivation for a firm’s actions, says economist Alex Tabbarok. For most firms most of the time, this is a good assumption, especially in a competitive market. This video by Marginal Revolution University explores how a company maximizes profit in a competitive environment where there are many buyers and sellers.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
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