• Measurements/definitions of—

• Total Cost, Revenue, Profit
• Average Cost, Revenue, Profit
• Marginal Cost, Revenue, Profit

• Profit Motive as a tool for maximizing net social benefit
• Inferior Goods
• Substitute Goods
• Complementary Goods
• Market Equilibrium

1. Explain how free markets respond to shortage and surplus. Include a graph.
2. Define and give an example of complementary goods.

Exercise/handout on measuring costs, revenues and profit.