This topic introduces the fundamental concepts of microeconomics, including the basic economic problem, opportunity cost, the role of markets, and the principles of supply and demand.
Introduction to Microeconomics
Key concepts, models, and tools for understanding individual economic behavior
| Aspect | Description |
|---|---|
| Scope | Study of how households, firms, and markets make decisions and interact. |
| Focus | Individual units (consumers, producers, workers, firms) rather than the whole economy. |
| Goal | Explain how resources are allocated, prices are determined, and welfare is affected. |
| Contrast with Macro | Macro‑economics looks at aggregate variables (GDP, inflation, unemployment). |
| Agent | Primary Decisions |
|---|---|
| Consumers | What to buy, how much to consume, how much to save. |
| Firms | What to produce, how much to produce, which production techniques to use. |
| Workers | How much labor to supply, which jobs to accept. |
| Government (in micro models) | Taxation, subsidies, regulation that affect market outcomes. |
[ p_1x_1 + p_2x_2 + \dots + p_nx_n \leq I ]
| Structure | Number of Sellers | Product Differentiation | Price‑Setting Power |
|---|---|---|---|
| Perfect Competition | Many | Homogeneous | None (price taker) |
| Monopolistic Competition | Many | Differentiated | Some (downward‑sloping demand) |
| Oligopoly | Few | Either | Strategic (game theory) |
| Monopoly | One | Unique | Full (price maker) |