microeconomics

Economics

The study of the consumption, production, and distribution of goods and services. To allocate the resources efficiently, we need to make Optimal Decisions.

Things needed to have optimal decision

Having all relevant information to make optimal decisions. Having the incentive to act on it

Factors of production

Land, labor, capital, entrepreneur 

Opportunity cost

What you must give up in order to get something. To obtain more of one thing, society and individuals must forgo the opportunity of getting the next big thing. 

Specialization

The situation in which each person specializes in the task that they are good at performing

Consumer surplus

is the difference between the price the consumer is willing to pay and the actual market price they pay for the product.

Producer surplus

is the difference between the amount that the producer receives and the minimum acceptable price it is willing to receive for the sale of the product.

equilibrium occurs where

quantity demanded = quantity supplied — in other words, where the supply and demand curves intersect.

Is non-rent control better than a rent-controlled area?

Yes

Do both price ceilings and price floors result in wasted resources?

Yes

Is the non-bidding floor above the equilibrium?

No

What are property rights?

The rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose.

Economic signals

Are any piece of information that helps people make better economic decisions

Five basic questions in economics 

What goods and services are produced

How will the goods and services be produced

Who will get goods and services 
How will the system accommodate change 

How will the system promote progress

Market structure steps

Private property

Competition- incentivizes innovation

Market disciple

Profit

Loss test

Invisible hand

the pursuit of self-interest benefits all of society

Competition is for what

The consumer

Biases

media bias can make people feel a certain way about something

Loaded Terminology

Use certain terms to make one angry

Post Hoc Fallacy

after this, therefore because of this 

Fallacy of composition

a logical error where one assumes that a property true of the individual parts of a whole must also be true of the whole itself.

Correlation not causation

Things can be correlated, but it does not always mean they have the

Pitfalls to sound reasoning

Biases

Loaded Terminology

Post Hoc Fallacy

Fallacy of Composition

Correlation Not Causation

Positive economics

is a stream of economics that focuses on the description, quantification, and explanation. Does not rely on emotion. Sometimes called descriptive economics.

Law of supply

The positive relationship between price and quantity of a good supplied

An increase in the price of an input makes production more costly for sellers.

supply does what 

Supply decrease

A fall in the price of an input makes the production less costly for the sellers

supply does what

Supply increases

Individual consumer surplus

is the maximum price the consumer is willing to pay for something minus the price they actually pay.

Property rights

are the rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose.

Property rights

are the rights of owners of valuable items, whether resources or goods, to dispose of those items as they choose

Price floor

the minimum price buyers are required to pay for a good or service

Where is price floor usually set

set ABOVE the equilibrium

Is non-bidding floor below or above the equilibrium?

Below

Both price ceilings and price floors result in?

wasted resources