Abstract
Microeconomic models of pure competition represent the producing and consuming elements of the economy by a series of homogeneous firms and households. As we examined in Chapter 3, production and resource (input) decisions can be analyzed with simple economic models of the production process. The optimal solutions of these models generate the output supply and input demand functions of the firms. The supply functions define how much will be produced by the firm at a given market price. The input demand functions relate the unit cost or price of a resource to how much is demanded of that resource.
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