Intro to Microeconomics

• Economics is a social science that studies the production, distribution, and consumption of goods and services
• It analyzes how individuals, businesses, governments, and societies make choices to allocate scarce resources to satisfy their wants and needs

Microeconomics

• Microeconomics focuses on the behavior of individual economic agents, such as households, firms, and markets
• Supply and demand is a model that explains how prices and quantities are determined in competitive markets
• Market equilibrium occurs where the supply and demand curves intersect, determining the equilibrium price and quantity
• Elasticity measures the responsiveness of one variable to a change in another, such as price elasticity of demand
• Market structures include perfect competition, monopolistic competition, oligopoly, and monopoly, each with different characteristics and implications for market outcomes
• Production costs include fixed costs, variable costs, total costs, average costs, and marginal costs
• Firms aim to maximize profits by producing at the level where marginal revenue equals marginal cost
• Market failures occur when markets fail to allocate resources efficiently, leading to suboptimal outcomes
• Externalities are costs or benefits that affect parties not involved in a transaction, leading to market inefficiencies
• Public goods are non-excludable and non-rivalrous, leading to the free-rider problem

Macroeconomics

• Macroeconomics examines the behavior of the economy as a whole, focusing on aggregate variables such as GDP, inflation, and unemployment
• Gross domestic product (GDP) measures the total value of goods and services produced within a country's borders during a specific period
• Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling
• Unemployment refers to the number of people who are actively seeking employment but are unable to find work
• Fiscal policy involves the use of government spending and taxation to influence the economy
• Monetary policy involves the central bank manipulating the money supply and interest rates to influence economic activity
• Economic growth refers to the increase in the production of goods and services in an economy over time
• Business cycles are fluctuations in economic activity, characterized by periods of expansion and contraction
• International trade involves the exchange of goods and services between countries
• Exchange rates determine the value of one currency in terms of another, influencing international trade and investment flows

Economic Systems

• Capitalism is an economic system characterized by private ownership of the means of production and the allocation of resources through markets
• Socialism is an economic system characterized by social ownership of the means of production and the allocation of resources through planning
• Mixed economies combine elements of both capitalism and socialism, with varying degrees of government intervention in the economy
• Traditional economies are based on customs, traditions, and historical precedents, with limited use of markets or government intervention
• Command economies are characterized by central planning, with the government making most economic decisions

Economic Development

• Economic development refers to the process of improving the standard of living in a country, including economic growth, poverty reduction, and improvements in health and education
• Poverty is the state of being poor, measured by income, consumption, or other indicators of well-being
• Inequality refers to the unequal distribution of income, wealth, or opportunities among individuals or groups in a society
• Human capital refers to the skills, knowledge, and experience possessed by individuals, which contribute to economic productivity
• Foreign aid involves the transfer of resources from developed to developing countries, aimed at promoting economic development
• Sustainable development seeks to meet the needs of the present without compromising the ability of future generations to meet their own needs
• Globalization refers to the increasing integration of economies through trade, investment, and migration

Key Economic Indicators

• GDP growth rate measures the percentage change in GDP from one period to another
• Inflation rate measures the percentage change in the general price level from one period to another
• Unemployment rate measures the percentage of the labor force that is unemployed
• Interest rates are the cost of borrowing money, expressed as a percentage
• Exchange rates determine the value of one currency in terms of another
• Consumer confidence index measures consumers' feelings about the economy and their spending plans
• Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector
• Government debt measures the total amount of money owed by the government