Microeconomics
These notes are designed to be clear, exam-ready, and easy to sell.
They cover the standard first-semester microeconomics syllabus
used in most colleges and universities, but can also easily be used for
your Economics course in Highschool
1. What is Economics?
Definition
Economics is the study of how individuals, firms, and governments make
choices to allocate scarce resources to satisfy unlimited wants.
Key Economic Problems
1. What to produce?
2. How to produce?
3. For whom to produce?
Scarcity and Choice
Scarcity exists because resources are limited
Every choice involves a trade-off
Opportunity Cost
The opportunity cost of a decision is the value of the next best
alternative forgone.
Example: If you study instead of working, the wages you could have
earned are the opportunity cost.
2. Basic Economic Concepts
Wants vs Needs
Needs: Essential for survival (food, shelter)
Wants: Desires beyond basic needs (luxury goods)
Goods
Free goods: Available without cost (air)
Economic goods: Scarce and have a price
Factors of Production
, 1. Land – Natural resources
2. Labor – Human effort
3. Capital – Man-made tools and machinery
4. Entrepreneurship – Risk-taking and organization
3. Production Possibility Curve (PPC)
Definition
The PPC shows the maximum possible output combinations of two goods,
given available resources and technology.
Assumptions
Fixed resources
Fixed technology
Only two goods
Key Concepts
Opportunity cost: Shown by the slope of the PPC
Efficient point: On the curve
Inefficient point: Inside the curve
Unattainable point: Outside the curve
Shifts in PPC
Outward shift → economic growth (technology, resources increase)
4. Demand
Meaning of Demand
Demand is the quantity of a good consumers are willing and able to
buy at various prices.
Law of Demand
As price increases, quantity demanded decreases, ceteris paribus.
Demand Schedule & Curve
Downward sloping curve
Price on Y-axis, quantity on X-axis
Determinants of Demand
These notes are designed to be clear, exam-ready, and easy to sell.
They cover the standard first-semester microeconomics syllabus
used in most colleges and universities, but can also easily be used for
your Economics course in Highschool
1. What is Economics?
Definition
Economics is the study of how individuals, firms, and governments make
choices to allocate scarce resources to satisfy unlimited wants.
Key Economic Problems
1. What to produce?
2. How to produce?
3. For whom to produce?
Scarcity and Choice
Scarcity exists because resources are limited
Every choice involves a trade-off
Opportunity Cost
The opportunity cost of a decision is the value of the next best
alternative forgone.
Example: If you study instead of working, the wages you could have
earned are the opportunity cost.
2. Basic Economic Concepts
Wants vs Needs
Needs: Essential for survival (food, shelter)
Wants: Desires beyond basic needs (luxury goods)
Goods
Free goods: Available without cost (air)
Economic goods: Scarce and have a price
Factors of Production
, 1. Land – Natural resources
2. Labor – Human effort
3. Capital – Man-made tools and machinery
4. Entrepreneurship – Risk-taking and organization
3. Production Possibility Curve (PPC)
Definition
The PPC shows the maximum possible output combinations of two goods,
given available resources and technology.
Assumptions
Fixed resources
Fixed technology
Only two goods
Key Concepts
Opportunity cost: Shown by the slope of the PPC
Efficient point: On the curve
Inefficient point: Inside the curve
Unattainable point: Outside the curve
Shifts in PPC
Outward shift → economic growth (technology, resources increase)
4. Demand
Meaning of Demand
Demand is the quantity of a good consumers are willing and able to
buy at various prices.
Law of Demand
As price increases, quantity demanded decreases, ceteris paribus.
Demand Schedule & Curve
Downward sloping curve
Price on Y-axis, quantity on X-axis
Determinants of Demand
