Micro Economics.pptx

1. Economics-Introduction

2. Economics- Defination
• Economics refers to choices or decisions made by individuals,
businesses, and governments regarding the production, distribution,
and consumption of goods and services. It also studies their resource
allocation for the same during scarcity. In short, it is a branch of social
science dealing with the interaction of people with value.

5. Microeconomics
• It studies the behavior of individual consumers and decision-making by
producers in times of scarcity. Other essential functions of it include:
• Examining market structures and how entities interact to create economics
systems
• Analyzing the impact of supply or demand in economics on production and
price
• Understanding ways to reduce costs and increase profits
• Studying the distribution of scarce resources by individuals and businesses
• Explaining interaction of the people with value

6. Factors
• It considers the following factors to understand the behavior and decisions of individuals and firms:
 The elasticity of Demand: It refers to the demand and response of consumers to price.
 Law of Supply and Demand: The higher the price, the lower the demand and increased supply. The lower the price, the higher the
demand and decreased supply.
 Utility: The ways goods or services are beneficial to consumers.
 Fixed Costs and Variable Cost: These associate with the production of goods and services. Variable cost varies with the volume of
production, while fixed cost does not change.
 Marginal Cost: It is the additional cost to increase the production of goods and services.
 Opportunity Cost: It incurs upon deciding to allocate a scarce resource and signifies the value or benefit missed when choosing
one option over another.
 Market Failure and Externalities: It happens when businesses do not assign prices effectively to consumers. It may lead to
negative and positive externalities.
 Market Structures: It comprises perfect competition, monopoly, duopoly, monopolistic competition, oligopoly, monopsony,
and oligopsony. These terms explain the competitiveness of the market.