Microeconomics: Supply, Demand, and Market Structures

• Economics is a social science that studies how individuals, businesses, and governments make decisions about allocating scarce resources to satisfy their unlimited wants and needs
• It encompasses the production, distribution, and consumption of goods and services
• It aims to explain how economies work and how economic agents interact

Microeconomics

• Microeconomics focuses on the behavior of individual economic agents, such as households, firms, and markets
• It examines how these agents make decisions in response to changes in prices, incentives, and resources
• Supply and demand: This is a fundamental concept that explains how prices are determined in competitive markets based on the interaction of buyers (demand) and sellers (supply)
• Elasticity: Measures the responsiveness of quantity demanded or supplied to changes in price, income, or other factors
• Market structures: Different types of markets, including perfect competition, monopoly, oligopoly, and monopolistic competition, each with distinct characteristics and implications for pricing and efficiency
• Consumer behavior: Analyzes how consumers make choices to maximize their satisfaction (utility) given their budget constraints
• Production theory: Examines how firms make decisions about production, including input choices, cost structures, and output levels
• Cost curves: Describe the relationship between a firm's production costs and its output
• Game theory: Studies strategic interactions between individuals or firms, often used to analyze behavior in oligopolistic markets

Macroeconomics

• Macroeconomics examines the economy as a whole, focusing on aggregate variables such as national income, unemployment, inflation, and economic growth
• Gross Domestic Product (GDP): The total value of all goods and services produced within a country's borders in a specific time period
• Unemployment: The percentage of the labor force that is actively seeking employment but unable to find it
• Inflation: The rate at which the general level of prices for goods and services is rising, eroding purchasing power
• Monetary policy: Actions undertaken by a central bank to manipulate the money supply and credit conditions to stimulate or restrain economic activity
• Fiscal policy: Government's use of spending and taxation to influence the economy
• Business cycles: Fluctuations in economic activity, characterized by alternating periods of expansion and contraction (recession)
• Aggregate supply and demand: A macroeconomic model that explains the overall price level and output in an economy based on the interaction of aggregate supply (total production capacity) and aggregate demand (total spending)
• Economic growth: The increase in the production of goods and services in an economy over time, often measured by the percentage change in real GDP

Economic Systems

• Market economy: Resources are allocated primarily through the interaction of supply and demand in free markets, with limited government intervention
• Command economy: The government makes most of the decisions about resource allocation, production, and distribution
• Mixed economy: A combination of market and command elements, where both the government and private sector play a role in the economy

International Economics

• International trade: The exchange of goods and services between countries, influenced by factors such as comparative advantage, trade barriers, and exchange rates
• Exchange rates: The value of one currency in terms of another, affecting the relative prices of goods and services traded internationally
• Balance of payments: A record of all economic transactions between a country and the rest of the world, including trade, investment, and financial flows

Economic Development

• Economic development focuses on improving the well-being of people in developing countries through sustainable economic growth, poverty reduction, and improved living standards
• Factors influencing economic development include:
  • Human capital: The skills, knowledge, and health of the workforce
  • Infrastructure: The physical and organizational structures needed for an economy to function
  • Technology: The application of scientific knowledge for practical purposes
  • Institutions: The formal and informal rules that govern economic activity
• Sustainable Development Goals (SDGs): A set of global goals adopted by the United Nations to address social, economic, and environmental challenges

Economic Indicators

• Economic indicators are statistics that provide insights into the current and future performance of the economy
• Leading indicators: Predict future economic activity
• Lagging indicators: Reflect past economic performance
• Coincident indicators: Occur simultaneously with the economic activity

Study of microeconomics, focusing on individual economic agents and markets. Key concepts include supply and demand, which determine prices in competitive markets. Elasticity measures responsiveness to price and income changes, while market structures vary from perfect competition to monopolies.