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**Week 8: Cost Functions, The Partial Equilibrium Competitive Model**

Definitions of Cost, Cost-Minimizing Input Choices, Cost Functions, Cost Functions and Shifts in Cost Curves, Shephard’s Lemma and the Elasticity of Substitution, Short-Run, Long-Run Distinction, The Nature and Behavior of Firms, Profit Maximization, Marginal Revenue, Short-Run Supply by a Price-Taking Firm, Profit Functions, Profit Maximization and Input Demand, Market Demand, Timing of the Supply Response, Pricing in the Very Short Run, Short-Run Price Determination, Shifts in Supply and Demand Curves: A Graphical Analysis, Mathematical Model of Market Equilibrium, Long-Run Analysis, Long-Run Equilibrium: Constant Cost Case, Shape of the Long-Run Supply Curve, Long-Run Elasticity of Supply, Comparative Statics Analysis of Long-Run Equilibrium, Producer Surplus in the Long Run, Economic Efficiency and Welfare Analysis,

Price Controls and Shortages, Tax Incidence Analysis, Trade Restrictions