Introduction to Economics
Economics is the study of how individuals and societies allocate scarce resources to satisfy
unlimited wants. It answers three fundamental questions: 1. What to produce? 2. How to produce?
3. For whom to produce? Branches of Economics: • Microeconomics – studies individual economic
units (consumers, firms, industries) • Macroeconomics – studies the economy as a whole (inflation,
unemployment, GDP, fiscal and monetary policy)
Demand
Demand refers to the quantity of a good that a consumer is willing and able to purchase at different
price levels during a given period. Law of Demand: 'Other things remaining constant (ceteris
paribus), as price increases, quantity demanded decreases and vice■versa.' Factors affecting
demand: 1. Price of the good 2. Income of consumer 3. Price of related goods
(substitutes/complements) 4. Consumer tastes/preferences 5. Expectations of future price
Demand Curve & Diagram
The demand curve slopes downward from left to right showing inverse relationship between price
and quantity demanded.
Supply
Supply refers to the quantity of goods that producers are willing to sell at different price levels in a
given time period. Law of Supply: 'Other things remaining constant, as price increases, quantity
supplied increases and vice■versa.' Factors affecting supply: 1. Price of the product 2. Cost of
production 3. Technology 4. Future price expectations 5. Government policies and taxes
Supply Curve & Diagram
Economics is the study of how individuals and societies allocate scarce resources to satisfy
unlimited wants. It answers three fundamental questions: 1. What to produce? 2. How to produce?
3. For whom to produce? Branches of Economics: • Microeconomics – studies individual economic
units (consumers, firms, industries) • Macroeconomics – studies the economy as a whole (inflation,
unemployment, GDP, fiscal and monetary policy)
Demand
Demand refers to the quantity of a good that a consumer is willing and able to purchase at different
price levels during a given period. Law of Demand: 'Other things remaining constant (ceteris
paribus), as price increases, quantity demanded decreases and vice■versa.' Factors affecting
demand: 1. Price of the good 2. Income of consumer 3. Price of related goods
(substitutes/complements) 4. Consumer tastes/preferences 5. Expectations of future price
Demand Curve & Diagram
The demand curve slopes downward from left to right showing inverse relationship between price
and quantity demanded.
Supply
Supply refers to the quantity of goods that producers are willing to sell at different price levels in a
given time period. Law of Supply: 'Other things remaining constant, as price increases, quantity
supplied increases and vice■versa.' Factors affecting supply: 1. Price of the product 2. Cost of
production 3. Technology 4. Future price expectations 5. Government policies and taxes
Supply Curve & Diagram
