Chapter 3: Microeconomics and Small Business

The purpose of this chapter is to review some ideas of microeconomics in the context of the economics of small business, for readers who have limited preparation in microeconomic theory. Readers who are confident of their knowledge of microeconomics might skip Sections 1 and 2 of this chapter without losing the thread. Among the most important concepts for this purpose are perfect competition, monopolistic competition and economies (and diseconomies) of the scale of the firm.