Microeconomics 1 PDF

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Microeconomics and macroeconomics Scarcity Production possibilities curve Demand curve and factors affecting demand curve

- As an economic concept, scarcity applies to Both money and time - The most fundamental economic problem is scarcity - Economics is best defined as the study of how people, businesses, governments, and societies make choices to cope with scarcity. - Economists point out that scarcity confronts both the poor and the rich. - Scarcity requires that people must make choices - Economics is the study of the choices we make because of scarcity. - In broad terms the difference between microeconomics and macroeconomics is that microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. - Studying the determination of prices in individual markets is primarily a concern of microeconomics. - Macroeconomics is the branch of economics that studies the economy as a whole - To answer for whom question we study Income differences - Production possibilities curve Marks the boundary between attainable combination of goods and services and unattainable combinations. -production possibilities frontier illustrates combination of goods and services that can be produced efficiently

-any production point outside the PPC is unattainable - Any point inside the PPC or PPF indicate that resources are misallocated

-inefficiently production means misallocated or unused - If the price of a substitute to good x increases, then Demand for good x will increase shift right - People buy more of good (a) when price of good (b) rises, these goods are substitutes People come to expect that the price of gallon of gasoline will rise next week Today’s demand for gasoline increase - If income increases or the price of substitute increase Demand curve shifts rightward

-A change in quantity demanded refers to a movement along the demand curve as a result of a change in the price of product...