Abstract
This chapter presents the core of neoclassical economic theory, the polypolistic competition model. The calculation of optimal consumer decisions is explained, as is the optimal calculation for companies. Partial market equilibrium and general equilibrium conditions are shown. The conditions for the general equilibrium to exist as a unique and stable equilibrium are described. Some further developments such as intertemporal optimizations are explained. Finally, some extensions in models are shown that include some slight modifications of assumptions, which result in at times substantial differences in results.
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