Complete Economics Summary with all Key Concepts

ECONOMIC PRINCIPLES IN A GLOBAL ERA

SCOPE OF ECONOMICS

Maeroeconomics -


Whole Economy

Microeconomics -

Individuals , Finns


Economic Agent -
Decision Maker (Group , Individual)


Scare Resources -




Supply < Demand #rare #externality


OPTIMISATION


Making the best Chain possible with information
given

Opportunity Cost -


Alternative Benefit


# Cost Benefit Analysis
-




Optimistin in Levels -

different Options
incurniy different Costs #highest net benefit



Marginal Analysis -

Difference between Options #Companion of change



EQUILIBRIUM

State of total Optimistin


Free Rider -




using Benefit
without incurring Cost




DEMAND AND SHPPLV

#Market Price


perfectly Competitive market -



Sellers have identical products sold for the market price,
,




ho Individual has power to influence the market free entry,




Market Demand Curve -
Sum of individual Demand Curves


Demand Curve Swifts -


Preferences, Wealth Availability Price future Expeditions
, , ,




Market Snpply Curve -



Relationship between Supply and Market Price

,DEMAND, SHPPLV AND EQUILIBRIUM


Competitive Equilibrium -




Competitive Equilibrium Price , Competitive Equilibrium Quantity

Excess Demand -



Storage D >S




Excess Supply -

Swplus S > D # Supply Flexibility



CONSKMERS AND INCENTIVES


The Bayer's Problem -

Preferences Market Price ,
, Budget

Consumer Swplus -

Difference between Market Price and Wikingness to
pay




Consumer Equilibrium Condition -


¥-1 M¥3 =
# marginal Benefit #Price




DEMAND ELASTKITY

Elasticity -


Sensitinfy of the
Charge of a Value


elastic Ep > 1
, perfectly elastic Ep = an
,




Unit elastic {
☐
= 1
,




indastic {
☐
< 1
,
perfectty inelastic {
☐
=
0




Price Elasticity of Demand -


Demand Changedneto Price Grange

AQ III
{ =
☐
ApI


Cross Price Elasticify of Demand
-
-
Demand Charge due to Price Charge of on other Product



AQ III
EDA Ap[I
=




Income Elasticit/ of Demand Demand due to home
Charge Charge
-


,




AQ [% ]
EI =


AII

, SELLERS AND INCENTNES


The Setter's Problem -
Production Method Production Cost ,
Market Price


Production -



Input →
Output

Short Rum -
# inflexib.IE#ACvftoutpntlevd # AW

Long Rum-



#flexible # ALF #DC
Q
Short Rum Production Function
/
-




W




Production Cost

Output Q Total Cost ( =
Cvtcrtc , # imphcit /opportunity Cost Te




Employees W
AverageTotal Cost Cio ATC




Marginal Product Qm MQ
Average Fixed Cost (
*
= AFC




cv.io?-AvcFixedCostC+-T-c Average Variable Cost
Variable Cost Cv VC




¥ Marginal Cost (m =
Mc




" " "

af GE
" ""

QMMQ („ j
"

Q W (v (F C ( (m

1 1 1 1 25 26 1 25 26 26


101 2 100 100 25 125 0.99 0.24 1.23 1.25




|
P



¥: RmD=Rm
C (m Demand Supply Q (m


-




÷

c
(m „
=
„„ =
(„ a MTEMC




: ,
-
Q Total Revenue R =p ✗ Q




|
Marginal Revenue RMMR Total Cost ( =
Cui Q

Price p
P Profit P =
R -

( =
(p cm ) Q
-
✗