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The course begins with a study of fundamental economic concepts such as scarcity, opportunity costs, production possibilities, specialization, and comparative advantage. Major topics include the nature and functions of product markets; factor markets; and efficiency, equity, and the role of government. [ 1 ]
[1] [2] [3] Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the economy as a whole, which is studied in macroeconomics. One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses [4 ...
The microfoundations project originated in the post-Second World War neoclassical synthesis where it is generally believed that neoclassical microeconomics fused with Keynesian macroeconomics. [5] The 'neoclassical microeconomics' in mention is the Marshallian partial-equilibrium approach , which emerged from the Walrasian general equilibrium ...
The concept of marginal cost in economics is the incremental cost of each new product produced for the entire product line. For example, if you build a plane, it costs a lot of money, but when you build the 100th plane, the cost will be much lower.
In economics, the profit motive is the motivation of firms that operate so as to maximize their profits.Mainstream microeconomic theory posits that the ultimate goal of a business is "to make money" - not in the sense of increasing the firm's stock of means of payment (which is usually kept to a necessary minimum because means of payment incur costs, i.e. interest or foregone yields), but in ...
[1] [14] The Diamond–Dybvig model provides an example of an economic game with more than one Nash equilibrium, where it is logical for individual depositors to engage in a bank run once they suspect one might start, even though that run will cause the bank to collapse. [1]
The earlier term for the discipline was "political economy", but since the late 19th century, it has commonly been called "economics". [22] The term is ultimately derived from Ancient Greek οἰκονομία (oikonomia) which is a term for the "way (nomos) to run a household (oikos)", or in other words the know-how of an οἰκονομικός (oikonomikos), or "household or homestead manager".
The first term on the right-hand side represents the substitution effect, and the second term represents the income effect. [1] Note that since utility is not observable, the substitution effect is not directly observable. Still, it can be calculated by referencing the other two observable terms in the Slutsky equation.