Producer Theory Calculus

… a core concept in Economic Analysis and Atlas102

Click for MIT OCW course

Click for MIT OCW course

Concept description

Producer theory analyzes the behaviour of producers and firms.

As noted in the Atlas entry, Producer Theory, it is possible to develop a good intuitive understanding of the underlying concepts without a knowledge of calculus. However, in order to develop what the Atlas Examination Standards refer to as an A level comprehension of producer theory, it is necessary to utilize a minimal degree of calculus. This minimal level is used in the  Jonathan Gruber Principles of Microeconomics course in MIT OpenCourseWare (link top right) and detailed links below:

  1. Introduction to Producer Theory (at,) with four chapters:
    1. Firm Production Functions (00:11:18)
    2. Short Run Production and Diminishing Marginal Product (00:07:04)
    3. Long Run Production and the Marginal Rate of Technical Substitution (00:11:03)
    4. Returns to Scale (00:07:52)
  2. Productivity and Costs (at with four chapters:
    1. Productivity (00:15:27)
    2. Introduction to Costs and Short Run Costs (00:08:45)
    3. Long Run Costs (00:15:10)
    4. Long Run Expansion Path (00:08:03)
  3. Competition I (at with seven chapters:
    1. Introduction to Perfect Competition (00:09:17)
    2. Search Theory (00:04:35)
    3. Firm Demand vs. Market Demand (00:05:27)
    4. Measuring Costs in Profit Maximization (00:07:04)
    5. Short Run Profit Maximization in a Competitive Market (00:13:21)
    6. Short Run Profit Maximization with Taxation (00:05:26)
    7. Short Run Shutdown Decisions (00:03:43)
  4. Competition II (at with five chapters:
    1. Short Run Shutdown Decisions (cont.) (00:06:51)
    2. Determining Short Run Market Equilibrium (00:12:29)
    3. Long Run Market Equilibrium: Firm Entry and Exit (00:12:34)
    4. Long Run Market Supply Curve with Perfect Competition (00:06:15)
    5. Long Run Market Supply Curve in Real World (00:11:56)
Assessment questions

The following problem set is from MIT OpenCourseWare at, accessed 20 May 2016.

ProbSet4The solutions can be viewed by clicking on the image of the solution for problem 1 below (at, accessed 20 May 2016):


Click for MIT OpenCourseWare solutions


MIT OpenCourseWare, Producer Theory, at, accessed 19 May 2016.

Atlas topic and subject

Producer Theory and Competition (core topic) in Economic Analysis.

Page created by: Ian Clark, last modified on 27 May 2016.

Image: MIT OpenCourseWare, Producer Theory, at, accessed 19 May 2016.