Introduction to Microeconomics

• Economics is a social science that studies how societies allocate scarce resources to satisfy unlimited wants and needs.
• It involves the study of production, distribution, and consumption of goods and services.

Microeconomics

• Microeconomics focuses on the behavior of individual economic agents, such as households, firms, and markets.
• It analyzes how these agents make decisions in response to changes in prices, incentives, and resource allocation.
• Supply and demand are fundamental concepts, where supply represents the quantity producers are willing to offer at different prices, and demand represents the quantity consumers are willing to purchase at different prices.
• Market equilibrium occurs where supply equals demand, determining the market price and quantity.
• Elasticity measures the responsiveness of quantity demanded or supplied to a change in price or other factors.
• Market structures include perfect competition, monopoly, oligopoly, and monopolistic competition, each characterized by different levels of competition and market power.
• Externalities are costs or benefits that affect parties not directly involved in a transaction, leading to market inefficiencies.
• Public goods are non-excludable and non-rivalrous, often under-provided by private markets due to free-rider problems.

Macroeconomics

• Macroeconomics examines the behavior of the economy as a whole, focusing on aggregate variables such as GDP, inflation, and unemployment.
• GDP (Gross Domestic Product) measures the total value of goods and services produced within a country's borders in a specific time period.
• Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.
• Unemployment refers to the percentage of the labor force that is actively seeking employment but unable to find jobs.
• Fiscal policy involves government spending and taxation to influence the economy.
• Monetary policy involves central bank actions to control 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.

Economic Systems

• A market economy relies on decentralized decision-making by individuals and firms, with prices determined by supply and demand.
• A command economy involves centralized decision-making by the government, which controls resource allocation.
• A mixed economy combines elements of both market and command economies, with government intervention to correct market failures and provide public goods.

International Economics

• International trade involves the exchange of goods and services across national borders.
• Comparative advantage explains that countries should specialize in producing goods and services for which they have a lower opportunity cost.
• Exchange rates determine the value of one currency in terms of another, influencing international trade and investment.
• Trade barriers, such as tariffs and quotas, restrict international trade and can lead to inefficiencies.
• Globalization refers to the increasing integration of economies through trade, investment, and migration.

Economic Development

• Economic development focuses on improving the well-being of individuals in a country, including income, health, and education.
• Factors influencing economic development include human capital, technology, infrastructure, and institutions.
• Poverty refers to the state of being poor, often measured by income levels below a certain threshold.
• Inequality refers to the unequal distribution of income and wealth within a society.
• Sustainable development aims to meet the needs of the present without compromising the ability of future generations to meet their own needs.