Unit 1cffffffffffffffffMicroeconomics.pptx

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1. Unit I

2. Definition Microeconomics studies economic behavior at the level of individual units. It focuses on consumers, firms, and markets. Analyzes decisions regarding consumption, production, and pricing.

3. Demand and Supply Demand: Quantity consumers are willing to buy at various prices. Supply: Quantity producers are willing to sell at various prices. Equilibrium: Point where demand equals supply.

4. Elasticity Measures responsiveness of demand or supply to changes. Types: Price, income, and cross elasticity.

5. Consumer Behavior Utility: Satisfaction from goods/services. Concepts: Marginal Utility, Indifference Curves, Budget Constraints.

6. Production and Costs Production Function: Input-output relationship. Costs: Fixed, variable, marginal, total, average.

7. Market Structures Perfect Competition: Many firms, no control over price. Monopoly: Single firm, full price control. Monopolistic Competition: Many firms, product differentiation. Oligopoly: Few firms, strategic interdependence.

8. Pricing and Output Decisions Pricing based on market structure. Profit maximization and cost-benefit analysis.

9. Factor Markets Markets for land, labor, capital. Determines wages, rent, interest, profit.

10. Market Failures Occurs when market fails to allocate efficiently. Causes: Externalities, Public Goods, Asymmetric Info, Monopoly.

11. Importance of Microeconomics Helps consumers in decision-making. Assists businesses in pricing and production. Guides policymakers on economic interventions. Explains market functioning and efficiency. Forms the base for welfare economics.

12. Real-Life Applications Pricing strategies (e.g., Amazon, Flipkart). Consumer brand choices. Minimum wage laws and taxation. Housing and fuel price fluctuations.

13. Micro vs Macro Economics Micro: Individual units (consumer, firm). Macro: Economy as a whole. Micro: Price, demand, supply. Macro: GDP, inflation, employment.