The Theory of the Firm

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The Theory of the Firm

This course is part of Microeconomics Principles Specialization

Instructor: Dr. José J. Vázquez-Cognet

3,401 already enrolled

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3 modules

Gain insight into a topic and learn the fundamentals.

28 reviews

Beginner level

Recommended experience

9 hours to complete

Flexible schedule

Learn at your own pace

3 modules

Gain insight into a topic and learn the fundamentals.

28 reviews

Beginner level

Recommended experience

9 hours to complete

Flexible schedule

Learn at your own pace

What you'll learn

Learn to apply marginal returns to inputs, key firm costs, and cost changes over time.
Understand perfect competition, profit maximization, and profit-maximizing output.
Learn about market structures and distinguish marginal revenue in different firms for profitability assessment.
Explore welfare effects of market power, types of price discrimination, and its societal impact.

Skills you'll gain

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Assessments

3 assignments

Taught in English

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This course is part of the Microeconomics Principles Specialization

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There are 3 modules in this course

In this course, we will begin covering the theory of the firm. Economists call this "The Economics of the Lemonade Stand." And that title makes perfect sense, since the concepts we cover can be used by anyone, from someone owning a lemonade stand, to a car manufacturing company, to a hair salon, to a burrito stand, etc. We will continue our discussion of the firm by focusing on those firms working in a perfectly competitive (or competitive) environment.

Also, why is it that when you fly, the person sitting next to you in the plane probably paid a different price for the ticket than what you paid for it? And why does Starbucks charge so much for its coffee even though you can buy coffee at Dunkin’ Donuts for almost half of that price? We will finish our discussion of the firm by focusing on cases that should be more familiar to you than the perfect competition examples we have been using.

Welcome! This course we will begin covering the theory of the firm. Economists call this section, "The Economics of the Lemonade Stand." And that title makes perfect sense, since the concepts we cover can be used by anyone, from someone owning a lemonade stand, to a car manufacturing company, to a hair salon, to a burrito stand, etc.

What's included

9 videos1 reading1 assignment1 discussion prompt

9 videos Total 64 minutes

1.1. Introduction to Production 5 minutes
2.1. Demonstration: The Production of Tennis Balls 7 minutes
2.2. The Production Process at a Glance 9 minutes
2.3. A Numerical Example: Cooks in the Kitchen 7 minutes
3.1. Fixed, Variable, and Total Costs 6 minutes
3.2. Marginal Costs 6 minutes
3.3. Cost Curves 9 minutes
4.1. Back to Black Dog 4 minutes
4.2. Applications 10 minutes

1 reading Total 15 minutes

Week 5 Overview 15 minutes

1 assignment Total 30 minutes

Week 5 Quiz 30 minutes

1 discussion prompt Total 60 minutes

Week 5 Discussion Questions 60 minutes

Welcome! This module we continue our discussion of the firm by focusing on those firms working in a perfectly competitive (or competitive) environment.

What's included

10 videos1 reading1 assignment1 discussion prompt

10 videos Total 75 minutes

1.1. Introduction to Competitive Output 3 minutes
2.1. The Maximizing Profit Assumption 4 minutes
2.2. The Profit Equation 7 minutes
2.3. The Profit Maximizing Rule 11 minutes
3.1. Perfect Competition 6 minutes
4.1. The Short-run Decision 8 minutes
4.2. Long-run Competitive Output 11 minutes
4.3. Using the Long-run Equilibrium Model 11 minutes
4.4. The Long-run Supply Curve 11 minutes
5.1. Conclusion to Competitive Output 3 minutes

1 reading Total 15 minutes

Week 6 Overview 15 minutes

1 assignment Total 30 minutes

Week 6 Quiz 30 minutes

1 discussion prompt Total 60 minutes

Week 6 Discussion Questions 60 minutes

So, why is it that when you fly the person sitting next to you in the plane probably paid a different price for the ticket than what you paid for it? And why does Starbucks charge so much for its coffee even though you can buy coffee at Dunkin’ Donuts for almost half of that price? This module we are finishing our discussion of the firm by focusing on cases that should be more familiar to you than the perfect competition examples we have been using.

What's included

10 videos1 reading1 assignment1 discussion prompt

10 videos Total 79 minutes

1.1. Pricing with Market Power: An Introduction 4 minutes
2.1. Market Structures With Pricing Power 8 minutes
2.2. Sources of Market Power 12 minutes
3.1. When Marginal Revenue is Less than Price 10 minutes
3.2. Marginal Revenue and the Price Elasticity of Demand 6 minutes
4.1. Perfect Price Discrimination 10 minutes
4.2. Imperfect Price Discrimination 10 minutes
4.3. Other Pricing Strategies 9 minutes
5.1. The Social Cost of Market Power 7 minutes
6.1. Pricing with Market Power: Conclusion 5 minutes

1 reading Total 15 minutes

Week 7 Overview 15 minutes

1 assignment Total 30 minutes

Week 7 Quiz 30 minutes

1 discussion prompt Total 60 minutes

Week 7 Discussion Questions 60 minutes

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Instructor

Instructor ratings

(6 ratings)

Dr. José J. Vázquez-Cognet

University of Illinois Urbana-Champaign

4 Courses 203,757 learners

Offered by

University of Illinois Urbana-Champaign

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Reviewed on Apr 29, 2025

This was a very wonderful course catering all the necessary concepts in theory of firm.

Reviewed on Oct 27, 2025

excellent mjnclwnl.jfliq3whgliqehgojqopj4jgok4negkiwjgopjy4o6;yjolmgl;

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