1. 6. Fundamental Concepts of Microeconomics 1.Objectives and Methods of Microeconomics 2.The Consumer 3.The Firm 4.The Market 5.Basic Issues in Welfare Economics

2. 6.1 Objectives and Methods of Microeconomics Art Work 1: David Dalla Venezia, No. 269, Oil on Canvas, 2000

3. Conflict resolution and Coordination Art Work 2: Theater Bonn, Germany, FRIDA KAHLO, 2003. Photo: Thilo Beu.

4. 6.2 The Consumer Fig. 6.1 The Individual Demand Curve

5. Increasing Income Fig. 6.2 Comparative Static Analysis of Demand as Income Increases

6. 6.3 The Firm Fig. 6.3 Equilibrium Output Decision of a Perfectly Competitive Firm

7. Equilibrium Supply Fig. 6.4 Equilibrium Supply for Alternative Prices

8. Supply Curve Fig. 6.5 The Supply Curve of the Firm

9. Comparative Statics of Supply Fig. 6.6 Comparative Static Analysis of the Individual Supply Curve

10. 6.4 The Market Fig. 6.7 Deriving the Market Demand Curve by Horizontal Aggregation of the Individual Demand Curves

11. Market Supply Fig. 6.8 Deriving the Market Supply Curve by Horizontal Aggregation of Individual Supply Curves

12. Market Equilibrium Fig. 6.9 Market Equilibrium

13. Comparative Statics of Equilibrium Fig. 6.10 Comparative Static Analysis of the Market Equilibrium

14. 6.5 Basic Issues in Welfare Economics Fig. 6.11 Socially Optimal and Perfectly Competitive Level of Production

15. Inter-firm Allocation Fig. 6.12 Cost-effective inter-firm Allocation

16. Inter-consumer Allocation Fig. 6.13 “Benefit-effective” Inter-consumer Allocation

17. Market Failure Fig. 6.14 Market Failure due to Negative Externalities