Economics Notes
1. Basic Concepts
Economics: The study of how people use resources to satisfy their needs and wants.
Scarcity: Limited resources relative to unlimited human wants.
Opportunity Cost: The cost of choosing one option over the next best alternative.
Microeconomics: The study of individual markets and actors (households, firms).
Macroeconomics: The study of the economy as a whole (inflation, unemployment,
GDP).
2. Demand and Supply
Demand: The quantity of a good or service consumers are willing to buy at various
prices.
Law of Demand: As price decreases, quantity demanded increases.
Supply: The quantity of a good or service that producers are willing to sell at
different prices.
Law of Supply: As price increases, quantity supplied increases.
Market Equilibrium: The point where demand and supply curves intersect.
3. Elasticity
Price Elasticity of Demand (PED): Measures how responsive the quantity demanded
is to a price change.
Price Elasticity of Supply (PES): Measures how responsive the quantity supplied is
to a price change.
Income Elasticity: Measures the responsiveness of demand to changes in consumer
income.
Cross-Price Elasticity: Measures the responsiveness of demand for a good to a price
change of a related good.
4. Market Structures
Perfect Competition: Many firms, identical products, no barriers to entry.
Monopolistic Competition: Many firms, differentiated products, low barriers to
entry.
Oligopoly: Few firms, high barriers to entry, potential for collusion.
Monopoly: One firm, high barriers to entry, price maker.
5. Macroeconomics
Gross Domestic Product (GDP): The total value of goods and services produced in
an economy.
Inflation: The general increase in prices and decrease in the purchasing power of
money.
Unemployment: The state of being able to work but unable to find a job.
Fiscal Policy: Government spending and taxation decisions.
Monetary Policy: Central bank actions (e.g., interest ra
