ABSTRACT

Economics provides an important lens by which to understand the important structures and interplay of forces that occur in the marketplace. Most of the definitions and problems posed in this chapter help us to clarify why certain media organizations and common carriers adopt the business strategies that they do. The study of microeconomics examines the behavior of decision-makers in the economy. Business organizations and governments are decision-makers. So too are individual citizens in their role as workers and consumers. The field of microeconomics is built around three basic types of choices that are made in any economy:

What products and services should be produced?

How shall the products and services be produced, including method, location and time frame?

Who is the intended audience for the various products and services being produced?

A central tenant of this chapter is that different market structures give rise to different patterns of behavior by the firms that operate in them. The term competition can be used to describe the degree of rivalry among sellers or buyers in the marketplace. It can also be used to describe the degree of openness that may exist in a market with respect to the availability of goods and services.