Introduction to Microeconomics

Microeconomics analyzes market mechanisms that underpin the formation of prices for goods and services subject to an allocation of the scarce resources of labor and raw materials, which serve to constrain markets.

Market Structure theory examines the features of a market, the number of firms in a market, their respective market share, and the similarity of products to help understand how consumers and producers respond to the prevailing or changing environment.

Economists refer to an opportunity cost as the benefit of performing an action or purchasing one good instead of another. Because we can always do something else, or buy a different product, opportunity costs matter because we can better understand or measure human behavior.

The Theory of Production examines the economic process of converting inputs into outputs. Throughout the production process, resources are used to create goods and services used for exchange in a market economy.

In the Theory of Consumer Demand economists look at how consumers’ preferences for goods and services are used in order to create a demand curve. The theory further examines how consumers arrive at an equilibrium between their preferences for those goods and services while maximizing the utility from consuming them subject to the constraint of a budget.