Introduction to Economics Concepts

Scarcity
- Limited resources vs. unlimited wants.
- Forces trade-offs and requires prioritization.
Opportunity Cost
- The cost of the next best alternative forgone when making a decision.
- Essential for evaluating economic choices.
Supply and Demand
- Law of Demand: As price decreases, quantity demanded increases, and vice versa.
- Law of Supply: As price increases, quantity supplied increases, and vice versa.
- Equilibrium price occurs where supply equals demand.
Market Structures
- Perfect Competition: Many firms, identical products, easy entry/exit.
- Monopolistic Competition: Many firms, differentiated products.
- Oligopoly: Few firms dominate market; products may be identical or differentiated.
- Monopoly: Single firm controls the market; high barriers to entry.
Macroeconomics vs. Microeconomics
- Macroeconomics: Study of the economy as a whole; includes national income, unemployment, inflation, and economic growth.
- Microeconomics: Focuses on individual consumers and firms; analyzes market mechanisms.

Gross Domestic Product (GDP): Total value of all goods/services produced in a country in a given period.
Unemployment Rate: Percentage of the labor force that is jobless and actively seeking work.
Inflation Rate: Rate at which general price levels rise, eroding purchasing power.

Market Economy: Decisions driven by supply and demand; minimal government intervention.
Command Economy: Government makes all economic decisions; controls resources and distribution.
Mixed Economy: Combines elements of both market and command economies.

Fiscal Policy: Government spending and tax policies to influence the economy.
Monetary Policy: Central bank actions (e.g., interest rates, money supply) to regulate the economy.

Trade: Exchange of goods and services between countries; can be influenced by tariffs and quotas.
Exchange Rates: The value of one currency for the purpose of conversion to another; affects international trade dynamics.

Classical Economics: Belief in free markets and that economies are self-regulating.
Keynesian Economics: Advocates for government intervention to stabilize economic cycles.
Monetarism: Focus on controlling money supply to manage economic stability.

Economics examines the allocation of scarce resources by individuals and societies.
Encompasses production, distribution, and consumption of goods and services.

Scarcity
- Limited availability of resources contrasted with unlimited human wants.
- Necessitates trade-offs, prompting prioritization of resource use.
Opportunity Cost
- Represents the cost of the next best alternative that is forfeited in decision-making.
- Crucial for assessing the value of economic choices.
Supply and Demand
- Law of Demand: Inversely related; decreased prices lead to increased quantity demanded.
- Law of Supply: Directly related; increased prices lead to greater quantity supplied.
- Equilibrium price is established where supply meets demand.
Market Structures
- Perfect Competition: Characterized by many firms, identical products, and easy market entry/exit.
- Monopolistic Competition: Many firms compete with differentiated products.
- Oligopoly: Dominated by a few firms, offering either similar or varied products.
- Monopoly: A single firm monopolizes the market, facing high entry barriers for others.
Macroeconomics vs. Microeconomics
- Macroeconomics: Analyzes the economy at a large scale, focusing on national income, unemployment, inflation, and growth.
- Microeconomics: Examines individual consumer and firm behavior, studying market mechanisms.

Gross Domestic Product (GDP): Measures the total value of all goods and services produced within a country over a specified period.
Unemployment Rate: Indicates the percentage of the labor force that is without a job but actively seeking employment.
Inflation Rate: Reflects the rate at which the overall price level increases, reducing purchasing power over time.

Market Economy: Relies on supply and demand for decision-making, minimal government intervention.
Command Economy: The government directs all economic decisions and management of resources.
Mixed Economy: Integrates aspects of both market and command economies.

Fiscal Policy: Involves government spending and taxation aimed at influencing economic conditions.
Monetary Policy: Managed by central banks, it involves adjusting interest rates and control of the money supply to maintain economic stability.

Trade: Involves the exchange of goods and services across borders, affected by tariffs and quotas.
Exchange Rates: Determines the conversion value of currencies, impacting international trade relations.

Classical Economics: Advocates for self-regulating free markets with minimal interference.
Keynesian Economics: Promotes active government intervention to stabilize economic cycles.
Monetarism: Focuses on managing the money supply for economic stability.

Enables informed decision-making regarding resource allocation.
Offers insights into market dynamics and government policy implications.
Critical for understanding and addressing societal challenges such as poverty and inequality.