Introduction to Microeconomics

Scarcity - limited nature of society’s resources

Economics - study of how society manages the scarce resources

Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources.

(examines how individual decision regarding production, consumption & pricing impact supply & demand )

Macro Economics is a branch of economics that studies the behavior of an economy as a whole, focusing on factors like inflation, unemployment, economic growth, and government policies.

Positive economics - the study of what is, focusing on facts and cause-and-effect relationships. It deals with objective analysis rather than normative judgments.

Normative economics involves making value judgments about the economy and recommending policy actions based on opinions and subjective analysis to achieve desirable goals.

10 Principles of Economics

How people make decisions

  1. People face trade-offs

  2. Cost of something is what you give up to get it

  3. Rational people think at the margin

  4. People respond to incentives

How people interact

  1. Trade benefits all parties involved

  2. Government intervention can improve market result

  3. Markets are an effective way to organize economic activity

How the economy works as a whole

  1. A country's standard of living relies on its production of goods and services

  2. Printing excess money leads to inflation

  3. Society faces a short-run trade off between inflation and unemployment