The main purpose of this class is to analyze markets using the supply and demand model. In Chapter 8 (Section 1, 2and 3), we discussed to production possibility model to show that there are gains from trading due to lower opportunity cost of production. Highlighting gains from trades was important since trade is the basis of markets. Answer the following questions:

1.What economics concept represents firm behavior in the market?

2.What economics concept captures gains to trade to firms from participating in the market?