Microeconomics: Individual Economic Units

Opportunity Cost: The value of the next best alternative that is given up when a choice is made
Sunk Cost: A cost that has already been incurred and cannot be changed by a decision
Rational Choice Theory: The idea that individuals make decisions based on rational calculations of costs and benefits

Law of Demand: The quantity of a good or service demanded increases as its price falls, ceteris paribus
Demand Curve: A graphical representation of the relationship between price and quantity demanded
Consumer Surplus: The difference between the maximum amount a consumer is willing to pay and the market price

Production Function: A mathematical representation of the relationship between inputs and outputs
Average Cost: The total cost of production divided by the quantity produced
Marginal Cost: The change in total cost resulting from a one-unit change in production
Economies of Scale: The cost advantages that arise from large-scale production

Perfect Competition: A market structure characterized by many firms, free entry and exit, and identical products
Monopoly: A market structure characterized by a single firm, barriers to entry, and a downward-sloping demand curve
Monopolistic Competition: A market structure characterized by many firms, free entry and exit, and differentiated products
Oligopoly: A market structure characterized by a few firms, interdependent decision-making, and barriers to entry

Externalities: The unintended consequences of economic activity that affect third parties
Public Goods: Goods and services that are non-rivalrous and non-excludable
Information Asymmetry: A situation in which one party has more or better information than the other party

Microeconomics studies individual economic units such as households, firms, and markets, examining their behavior and decision-making processes.

Opportunity Cost is the value of the next best alternative that is given up when a choice is made, representing the trade-off between different options.
A Sunk Cost is a cost that has already been incurred and cannot be changed by a decision, making it irrelevant to current and future decisions.
Rational Choice Theory assumes that individuals make decisions based on rational calculations of costs and benefits, aiming to maximize their utility.

The Law of Demand states that the quantity of a good or service demanded increases as its price falls, ceteris paribus, assuming all other factors remain constant.
A Demand Curve is a graphical representation of the relationship between price and quantity demanded, showing the inverse relationship between the two.
Consumer Surplus is the difference between the maximum amount a consumer is willing to pay and the market price, representing the benefit gained from trading.

A Production Function is a mathematical representation of the relationship between inputs and outputs, showing how changes in inputs affect output.
Average Cost is the total cost of production divided by the quantity produced, providing a measure of the cost per unit.
Marginal Cost is the change in total cost resulting from a one-unit change in production, indicating the additional cost of producing one more unit.
Economies of Scale arise from large-scale production, reducing the average cost per unit due to increased efficiency and lower costs.

Perfect Competition is characterized by many firms, free entry and exit, and identical products, leading to a perfectly elastic demand curve.
Monopoly is characterized by a single firm, barriers to entry, and a downward-sloping demand curve, giving the firm market power.
Monopolistic Competition is characterized by many firms, free entry and exit, and differentiated products, resulting in a downward-sloping demand curve.
Oligopoly is characterized by a few firms, interdependent decision-making, and barriers to entry, leading to a complex and dynamic market.

Externalities are the unintended consequences of economic activity that affect third parties, such as pollution or positive externalities like education.
Public Goods are goods and services that are non-rivalrous and non-excludable, such as national defense or public parks.
Information Asymmetry occurs when one party has more or better information than the other party, leading to potential market failures and inefficiencies.