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microeconomics
Study of individual choices, markets, and resource allocation.
macroeconomics
Study of the economy as a whole, including growth and inflation.
positive economics
concerned with what is in the economy
normative statements
subjective statements which reflect opion
opportunity cost
The value of the next best alternative forgone.
what is PPF
Shows the maximum output with fixed resources and technology.
3 misconsepations of PPF
resources are fixed
technology is fixed
only two goods
what is productivity
Maximize goods fast with minimal resources."
what is market
the exchange of goods and services between buyers and seller
four elements of market
consumers create demand
producers create supply
goods and service are exchanged
the participants take part voluntarily
types of market
product market
factor market
capital market
what is product market
the finial good or service is bought and sold
what is factor market
Market where businesses buy resources like labor, land, and capital.
what is capital market
Market for raising funds through stocks and bonds.
market structure
firms sell goods under different market conditions called market structure
types of market structure
perfect competition
Monopoly
oligopoly
perfect competition
A market with many firms, identical products, and perfect information.
Monopoly
A market structure with a single seller dominating the market.
Oligopoly
A market dominated by a few large firms with interdependent decisions.
what is demand
what conumers are willing to pay for a good or a service
what is law of demand
when price increase demand decreases
the substitution effect
An increase in the price of good Z will lead consumers to switch to cheaper substitutes, reducing the demand for good X.
law of supply
if price increases supply also increases
2 reason of supply
profit motive
order to produce
what is profit motive
if you are a producer you are more willing to sell your product at a higher price than a lower price
what is order to produce
To produce more, you need more inputs, which can increase your unit cost, like hiring more labor.
what cause movement along supply curve
increase in price
what causes a shift in the supply curve
factor other than price
supply increase
right
supply decrease
left
factors affecting supply
cost of production
technology
price of other goods
expectations of future prices
number of suppliers
supply distribution
what is equilibrium
when demand and supply curve intersect
what happens to the market when its out of equilibrium
natural moverment back to equilibrium point will occur
what is a equilibrium shortage
the price is lower than the equilibrium and quanity demanded is higher than supply
what happen to a shortage to move back to equilibrium
the price will increase back to equilibrium
what is a surplus
the price is above equilibrium and quantity supplied to higher than demand
what happen to surplus to get back to equilibrium
price will decrease
