Microeconomics II introduces students to the producer theory. We use mathematical and analytical toolsto study firm’s behavior, properties of the firm’s decisions in the long-run and the short run, duality between profit maximization and cost minimization. Market demand and supply functions are derived from individual decisions. Equilibrium in a competitive market is studied. The effects of a tax policy on theconsumer’s and producer’s surpluses are analyzed. Efficient allocation of resources is investigated usingPareto optimum concept within an exchange economy. First and second fundamental theorems of welfare economics are discussed.