After reading this chapter, students should be able to:

• Describe the relationship between a firm's profit-maximizing sales quantity and the firm's marginal revenue and marginal cost.
• Demonstrate how price-taking firms should determine their profit-maximizing sales quantities.
• Determine a price-taking firm's supply function.
• Explain why price-taking firms usually respond to price changes more over the long run than they do over the short run.
• Define producer surplus and describe its measurement.