Microeconomics Basics

Economics: Study of human behavior as a relationship between ends and scarce means
Microeconomics: Study of individual economic units, such as households, firms, and markets
Scarcity: Fundamental problem of economics, referring to the limited nature of resources
Opportunity Cost: Value of the next best alternative given up when a choice is made

Law of Demand: As price increases, quantity demanded decreases, ceteris paribus
Law of Supply: As price increases, quantity supplied increases, ceteris paribus
Demand Schedule: Table showing various quantities demanded at different prices
Supply Schedule: Table showing various quantities supplied at different prices
Equilibrium: Point at which demand and supply curves intersect, resulting in no excess demand or supply

Consumer's Equilibrium: Point at which the consumer maximizes satisfaction, given budget constraint
Indifference Curve: Graphical representation of different combinations of goods providing equal satisfaction
Budget Line: Graphical representation of different combinations of goods that can be purchased with a given income

Gross Domestic Product (GDP): Total value of goods and services produced within a country's borders
Net Domestic Product (NDP): GDP minus depreciation
National Income: Total income earned by residents of a country
Per Capita Income: Average income per person in a country

Money: Medium of exchange, unit of account, and store of value
Functions of Money: Facilitates exchange, provides standard of value, and serves as a store of value
Central Bank: Regulator and supervisor of the banking system, responsible for monetary policy
Commercial Banks: Accept deposits, provide loans, and facilitate economic activity

Economics studies the relationship between human wants and scarce resources to satisfy those wants.
Microeconomics focuses on individual economic units, such as households, firms, and markets, to understand their behavior and decision-making processes.
Scarcity is the fundamental problem of economics, as it limits the availability of resources to meet unlimited human wants.
Opportunity cost is the value of the next best alternative given up when a choice is made, which is a crucial concept in understanding decision-making.

The law of demand states that as the price of a good increases, the quantity demanded decreases, ceteris paribus (all other things being equal).
The law of supply states that as the price of a good increases, the quantity supplied increases, ceteris paribus.
Demand schedules and supply schedules are tables that show the relationship between price and quantity demanded or supplied.
The point of equilibrium is where the demand and supply curves intersect, resulting in no excess demand or supply.

A consumer's equilibrium is reached when they maximize their satisfaction, given their budget constraint.
Indifference curves graphically represent different combinations of goods that provide equal satisfaction to a consumer.
Budget lines graphically represent different combinations of goods that can be purchased with a given income.

Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders.
Net Domestic Product (NDP) is GDP minus depreciation, which accounts for the wear and tear of capital goods.
National Income is the total income earned by residents of a country, including income from abroad.
Per Capita Income is the average income per person in a country.

Inflation is a sustained increase in the general price level over time, eroding the purchasing power of money.
Deflation is a sustained decrease in the general price level over time, increasing the purchasing power of money.
Causes of inflation include demand-pull, cost-push, and monetary policy.
Effects of inflation include redistributive effects, uncertainty, and hyperinflation.

Money serves as a medium of exchange, unit of account, and store of value.
The functions of money include facilitating exchange, providing a standard of value, and serving as a store of value.
Central banks regulate and supervise the banking system and are responsible for monetary policy.
Commercial banks accept deposits, provide loans, and facilitate economic activity.