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The key to mastering economics is to learn to quiz yourself on the principles to make sure you understand them fully.  

The key to mastering economics is to learn to quiz yourself on the principles to make sure you understand them fully.  

What is the most important concept of the course?  Perhaps it is the obvious desire of companies to maximize their profits.  Whether it is a monopoly or a perfectly competitive firm, each firm shares this common goal with all other firms: it wants to make more profits.  You can answer 20% or more of the questions on any microeconomics exam simply by applying that basic rule.  And at what point does any company maximize its profits?  Where marginal revenue (MR) declines to the point where it equals marginal cost (MC).  When marginal revenue declines further (or marginal cost increases more), then the company is losing profits.  It won’t do that.

What is the most important concept of this course?  Perhaps it is the obvious desire of companies to maximize their profits.  Whether it is a monopoly or a perfectly competitive firm, each firm shares this common goal with all other firms: it wants to make more profits.  You can answer 20% or more of the questions on any microeconomics exam simply by applying that basic rule.  And at what point does any company maximize its profits?  Where marginal revenue (MR) declines to the point where it equals marginal cost (MC).  When marginal revenue declines further (or marginal cost increases more), then the company is losing profits.  It won’t do that.

You need to understand the supply and demand curves thoroughly.  Know what elasticity is, in all its forms.  Appreciate what substitutes and complements are.

You need to understand the supply and demand curves thoroughly.  Know what elasticity is, in all its forms.  Appreciate what substitutes and complements are.