How prices and income limit your choices.

How firms like Coca-Cola and Pepsi react to each other’s moves (look for the Nash Equilibrium ). 4. Equilibrium and Efficiency Why do markets work—and why do they fail? Market Equilibrium: Where supply meets demand.

The efficiency lost due to taxes, subsidies, or monopolies.

Shifting from consumers to firms, you need to understand how businesses decide what to produce. Focus on:

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