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Editor's Notes
Microeconomics studies individuals and firms and how they make choices for choosing resources for spending
A few areas of interest learning microeconomics include the U.S. Economic System, Trade-Offs, and Supply & Demand
Taxes help fund public services such as: public schools, police, fire protection, parks, libraries and road maintenance.
Trade Offs are often described as an opportunity cost. A trade-off can be a sacrifice that must be made to get a certain product or experience.
EXAMPLE: Choosing to produce cars with better safety issues may decrease the production of cars made with better fuel efficiency
Trade Offs can be presented by using economic graphs & models.
SUPPLY & DEMAND
Prices rise and the supply rises
More of a demand for a product pushes the price down.
When the price falls, consumers buy more and the supply decreases
When people’s incomes fluctuate they may buy substitutes
This affects the equilibrium and causes prices to fall
EXAMPLE: When incomes are lower people may choose to buy beer instead of wine. Wine may be considered a luxury item.
