01. Microeconomics

Opportunity cost

What we are missing , the second best thing we can do that with that resource

Free good vs public good

1. Free of cost, no opportubity cost, not scarce. ex: sunlight, sea water, flowing water, air etc

2. Not free, opportunity cost is present

Factors of production

1. Land

2. Labor

3. capital

4. Entrepreneurship

5. Technology (outside of human mind)

Knolwedge vs tech

Capital vs tech

1. Natural resources: gold, coal, wheat, rice, forests, minrals, oil reserves - RENT

2. Physical, Intellectual(it is still inside human mind) - WAGES

3. ones which increase the productivity of labour. tools, machinery - INTEREST

4. Risks, resource management - PROFIT

5. Like blueprints, softwares, algos

Knowledge is inside humans , it takes time to learn etc but tech can be bought and sold fastly

capitl depreciates over time but tech gets better over time

1. Electricity which Factors of production?

2. Human knowledge is which factor of production

1. Capital

2. Human capital - labour

Potential GDP

Possible maximum output of the economy - sustainably

Inferior goods

Demand decreases with income increase

necessary good vs luxury good

1. price change doesnt effect demand much

2. price change effects demand a lot

Veblem goods

Status items, demand increases as price increases

Giffen goods

inferior goods whose demand increases as price increases

Cross elasticity demand

change in demand/ change in related product price

Perfect competition

1. No of firms

2. Size of each firm relative to industry

3. Products similarity

4. Knowledge

1. many

2. small

3. identical

4. Perfect

Imperfect Competition

1. No of firms

2. Size of each firm relative to industry

3. Products similarity

1. many

2. small

3. Slightly different

Monopoly

1. No of firms

2. Size of each firm relative to industry

3. Products similarity

4. market control/ price control

1. One firm

2. Largest

3. Only one product

4. Huge

Oligopoly

1. No of firms

2. Size of each firm relative to industry

3. Products similarity

4. market control/ price control

1. Few

2. large

3. similar/differential

4. Collusion so high power

Wasting asset

A NATURAL RESOURCE WITH A FINITE LIFSPAN (need not to be natural)

Piguvian tax vs Piguvian Subsidy

1. Tax on thins with negative externalities

2. Subsidy on things with positive externalities

In short term

1. Price elasticity (PE) of Mfg Goods

2. PE of Agri goods

3. PE of Aggregrate Supply

1. low-medium

2. verylow

3. elastic

In Long term

1. Price elasticity (PE) of Mfg Goods

2. PE of Agri goods

3. PE of Aggregrate Supply

1. highly elastic

2. highly elastic

3. perfectly inelastic

Sectors of economy

1. Primary

2. Secondary

3. Teritiary (Services)

4. Quarternary

5. Quinary

1. selling natural items without modification

2. Modifies the items

3. Giving service

4. Creating new tech, R&D. Ex: An IT service creating AI for autonomous cars

5. Decision- makers