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Intro to Microeconomics Notes

The class notes covered the key concepts of microeconomics including: 1) The fundamental principles of microeconomics which studies individual and firm decision-making and resource allocation. 2) Supply and demand foundations where equilibrium occurs at the price where quantity demanded equals quantity supplied. 3) Elasticity measures the responsiveness of quantity to price changes. The notes also discussed consumer behavior, production costs, different market structures like perfect competition and monopoly, and sources of market failures requiring public policy solutions.

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ilija.vesic.2021.10
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80 views2 pages

Intro to Microeconomics Notes

The class notes covered the key concepts of microeconomics including: 1) The fundamental principles of microeconomics which studies individual and firm decision-making and resource allocation. 2) Supply and demand foundations where equilibrium occurs at the price where quantity demanded equals quantity supplied. 3) Elasticity measures the responsiveness of quantity to price changes. The notes also discussed consumer behavior, production costs, different market structures like perfect competition and monopoly, and sources of market failures requiring public policy solutions.

Uploaded by

ilija.vesic.2021.10
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Class Notes: Introduction to Microeconomics

Date: March 3, 2024

Instructor: Prof. M. Econ

Key Concepts Covered:

1. Fundamental Principles of Microeconomics:


 Microeconomics is the branch of economics that studies the behavior of
individuals, households, and firms in making decisions about the allocation
of scarce resources.
 It focuses on understanding how markets work, the determinants of
individual choices, and the implications of those choices for resource
allocation and welfare.
2. Supply and Demand:
 The foundation of microeconomics lies in the interaction of supply and
demand in markets.
 Demand represents the quantity of a good or service that consumers are
willing and able to purchase at various prices, while supply represents the
quantity that producers are willing and able to sell.
 Equilibrium occurs when the quantity demanded equals the quantity
supplied, determining the market price and quantity exchanged.
3. Elasticity:
 Elasticity measures the responsiveness of quantity demanded or supplied
to changes in price or other factors.
 Price elasticity of demand measures the percentage change in quantity
demanded in response to a one percent change in price, while price
elasticity of supply measures the percentage change in quantity supplied
in response to a one percent change in price.
4. Consumer Behavior:
 Consumer behavior refers to the decision-making process of individuals as
they allocate their resources to maximize utility, subject to budget
constraints.
 Utility theory provides a framework for understanding how consumers
make choices to maximize satisfaction or utility from consuming goods
and services.
5. Production and Costs:
 Firms make production decisions based on the costs of inputs and the
technology available to produce goods and services.
 The production function relates the quantity of inputs used to the quantity
of output produced, while the cost function describes the relationship
between input prices and the cost of production.
6. Market Structures:
 Market structures describe the characteristics of different types of markets
based on the number of firms, the degree of product differentiation, and
the ease of entry and exit.
 Common market structures include perfect competition, monopoly,
monopolistic competition, and oligopoly, each with distinct implications
for market outcomes and efficiency.
7. Market Failures and Public Policy:
 Market failures occur when the allocation of resources by markets is not
efficient, leading to deadweight loss and inefficiency.
 Public policy interventions, such as taxes, subsidies, price controls, and
regulation, aim to correct market failures and improve economic welfare.

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