ABSTRACT
This chapter introduces some important basic principles of microeconomics. It examines some extensions of, and departures from, the standard static competitive paradigm. The chapter also examines monopoly, cartels, rent-seeking behavior, moral hazard, adverse selection, and public goods. It considers different types of capital, the determinants of interest rates, the rate of return on a security, preferences on risk, and how to determine the present value of future payments. A cartel is a group of independent firms that attempt, by a collusive agreement, to behave as a collective monopoly. The members of a cartel may be buyers or sellers. Game theory is used to analyze the behavior of individual economic agents, whether persons or firms, in a setting where what others do both affects what one can do and is affected by what does. The chapter focuses on the general technique that is used to compute the present value of payments to be received, or made, in the future.
