This document offers a detailed introduction to microeconomics at the university/college or high school level, focusing on the key concepts of Consumer Theory. The content is divided into three main sections: Preferences and Utility, Budget Constraints, and Consumer Choice and Demand Curves. These ...
Microeconomics is the branch of economics that focuses on the behavior of
individuals and firms in making decisions regarding the allocation of limited
resources. It examines how these decisions affect the supply and demand for goods
and services, which determines prices, and how prices, in turn, allocate scarce
resources among alternative uses.
Basic Economic Concepts
Scarcity:
- Scarcity refers to the fundamental economic problem of having limited resources
to meet unlimited wants and needs. Because resources (like time, money, raw
materials) are finite, individuals and societies must make choices about how to
allocate them efficiently.
Choice:
- Given scarcity, choice is essential. Economic agents (individuals, firms,
governments) must decide which needs and wants to satisfy and which to forego.
These choices involve trade-offs, as opting for one alternative usually means giving
up another.
Opportunity Cost:
- Opportunity cost is the value of the next best alternative that is forgone when a
choice is made. It represents the benefits that could have been obtained by
choosing the next best alternative. Understanding opportunity cost is crucial for
making informed decisions.
Supply and Demand
Demand:
- Demand is the quantity of a good or service that consumers are willing and able to
purchase at various prices during a specific period. The law of demand states that,
all else being equal, as the price of a good decreases, the quantity demanded
increases, and vice versa. This relationship is typically represented by a downward-
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller tamannaverma. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.47. You're not tied to anything after your purchase.
