Microeconomics 1

Scarcity

The basic economic problem of having finite resources but infinite wants.

Factors of Production

Resources including capital, enterprise, land, and labor used to produce goods and services.

Opportunity Cost

The cost of the next best alternative foregone when a choice is made.

Production Possibility Frontiers (PPF)

Shows the maximum possible production of goods/services with given resources and different combinations that can be produced.

Demand

The quantity of a good/service consumers are willing and able to buy at a given price in a specific time period.

Law of Demand

Inverse relationship between price and quantity demanded, assuming other factors remain constant (ceteris paribus).

Non-Price Related Factors

Factors like population, advertising, income, etc., that shift the demand curve.

Supply

The quantity of a good or service producers are willing and able to produce at a given price in a specific time period.

Law of Supply

Direct relationship between price and quantity supplied, assuming other factors remain constant (ceteris paribus).

Costs of Production

Factors affecting production costs including productivity, technology, subsidies, etc.

Market Equilibrium

Where demand equals supply, leading to allocative efficiency in a free market.

Excess Demand and Supply

Situations where prices rise due to excess demand or fall due to excess supply.