Microeconomics Supply and Demand Overview

Supply: The quantity of a good that producers are willing to sell at different prices.
Demand: The quantity of a good that consumers are willing to purchase at different prices.
Law of Demand: As price decreases, quantity demanded increases; vice versa.
Law of Supply: As price increases, quantity supplied increases; vice versa.
Equilibrium: The point where supply equals demand, determining the market price.
Shifts in Curves:
- Demand shift factors: income, preferences, prices of related goods.
- Supply shift factors: production costs, technology, number of sellers.

Perfect Competition: Many buyers and sellers, identical products, easy entry and exit.
Monopoly: Single seller, unique product, high barriers to entry, price maker.
Oligopoly: Few sellers, products may be identical or differentiated, interdependent pricing.
Monopolistic Competition: Many sellers, differentiated products, some control over pricing.

Utility: Satisfaction derived from consuming goods/services.
Marginal Utility: The additional satisfaction from consuming one more unit.
Law of Diminishing Marginal Utility: As consumption increases, marginal utility decreases.
Budget Constraint: The limit on consumption based on income and prices.
Indifference Curves: Graphical representation of consumer preferences, showing combinations of goods providing equal satisfaction.

Price Elasticity of Demand (PED): Measures responsiveness of quantity demanded to price changes.
- Elastic (>1): Demand changes significantly with price change.
- Inelastic (<1): Demand changes little with price change.
Income Elasticity of Demand: Measures responsiveness of demand to changes in income.
- Normal goods: Positive elasticity.
- Inferior goods: Negative elasticity.
Cross Elasticity of Demand: Measures responsiveness of demand for one good to changes in the price of another good.
- Substitutes: Positive elasticity.
- Complements: Negative elasticity.

Total Cost (TC): Sum of fixed costs (do not change with output) and variable costs (change with output).
Average Cost (AC): Total cost divided by the quantity produced.
Marginal Cost (MC): The additional cost of producing one more unit.
Economies of Scale: Cost advantages that firms experience as their output increases.
Diseconomies of Scale: Increases in average cost when a firm becomes too large.

Supply: Quantity sellers are willing to offer at various price levels.
Demand: Quantity consumers are ready to buy at different price points.
Law of Demand: Inverse relationship between price and quantity demanded; lower prices lead to higher demand.
Law of Supply: Direct relationship between price and quantity supplied; higher prices lead to increased supply.
Equilibrium: Occurs where supply and demand curves intersect, establishing the market price.
Demand Shift Factors: Changes in income, consumer preferences, and prices of substitutes or complements can shift the demand curve.
Supply Shift Factors: Variations in production costs, technological advancements, and the number of sellers affect the supply curve.

Perfect Competition: Characterized by many participants, identical products, and no barriers to entry, leading to price-taking behavior.
Monopoly: Single supplier dominates, offering a unique product with high entry barriers, exerting control over prices.
Oligopoly: Market dominated by a few firms, where pricing strategies are influenced by competitors, with products that may be similar or vary.
Monopolistic Competition: Many firms sell differentiated products, allowing for some pricing power among sellers, but facing competition.

Utility: The pleasure or benefit gained from consuming a good or service.
Marginal Utility: Additional utility derived from consuming one more unit of a good.
Law of Diminishing Marginal Utility: As a consumer consumes more of a good, the additional satisfaction gained from each extra unit declines.
Budget Constraint: Reflects the limitations on consumer spending based on their income and the prices of goods.
Indifference Curves: Illustrate combinations of two goods that provide equal satisfaction to the consumer, reflecting their preferences.

Price Elasticity of Demand (PED): Quantifies how much the quantity demanded of a good responds to a change in its price.
Elastic Demand: If PED is greater than 1, demand is sensitive to price changes, resulting in large shifts in quantity.
Inelastic Demand: If PED is less than 1, demand is relatively insensitive to price changes, causing minimal shifts in quantity.