Scribd
Upload
79 views3 pages

Introduction To Microeconomics Chapter1 Summary

Chapter 1 introduces microeconomics, defining it as the study of individual economic units and resource allocation. It discusses central economic problems, types of economic systems, and the distinction between positive and normative economics. The chapter also covers key concepts like opportunity cost, the production possibility curve, and microeconomic tools essential for analyzing economic behavior.

Uploaded by

sujalguptasujal99
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
79 views3 pages

Introduction To Microeconomics Chapter1 Summary

Chapter 1 introduces microeconomics, defining it as the study of individual economic units and resource allocation. It discusses central economic problems, types of economic systems, and the distinction between positive and normative economics. The chapter also covers key concepts like opportunity cost, the production possibility curve, and microeconomic tools essential for analyzing economic behavior.

Uploaded by

sujalguptasujal99
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Chapter 1: Introduction to Microeconomics

1. Meaning of Economics

Economics is the study of how societies use limited resources to produce valuable commodities and

distribute them among people. It deals with human behavior concerning the utilization of scarce resources.

Definitions:

- Adam Smith: Economics is the science of wealth.

- Alfred Marshall: Economics is the study of mankind in the ordinary business of life.

- Robbins: Economics studies human behavior as a relationship between ends and scarce means.

2. Branches of Economics

Microeconomics: Studies individual units like households and firms. Example: Demand, supply, price

determination.

Macroeconomics: Studies the economy as a whole. Example: Inflation, unemployment, national income.

3. Microeconomics - Definition and Features

Microeconomics analyzes the behavior of individual economic agents and allocation of limited resources.

Features:

1. Studies individual units

2. Analyzes demand/supply

3. Focuses on price/resource allocation

4. Market efficiency

5. Partial equilibrium analysis.

4. Central Economic Problems

1. What to produce? (Type and quantity)

2. How to produce? (Labour vs Capital)

3. For whom to produce? (Distribution of goods).

5. Causes Behind Central Problems

1. Scarcity of resources
Chapter 1: Introduction to Microeconomics

2. Unlimited wants

3. Alternative uses of resources.

6. Types of Economic Systems

Capitalist (e.g. USA): Market-driven

Socialist (e.g. North Korea): Government-controlled

Mixed (e.g. India): Blend of both systems.

7. Positive vs. Normative Economics

Positive Economics: Deals with facts (e.g. 'Inflation is 7%')

Normative Economics: Deals with opinions (e.g. 'Government should reduce inflation').

8. Economic vs Non-Economic Activities

Economic: Done for income (e.g. job)

Non-Economic: Done for love, religion (e.g. charity work).

9. Opportunity Cost

The value of the next best alternative foregone.

Example: Choosing to study economics over accounts means the cost is what you miss from accounts.

10. Economy

A system solving what, how, and for whom to produce using available resources efficiently.

11. Production Possibility Curve (PPC)

Shows different combinations of two goods produced with given resources and technology.

Features:

1. Downward sloping (trade-off)

2. Concave shape (increasing opportunity cost)

Assumptions: Fixed resources/technology, full employment, only two goods.


Chapter 1: Introduction to Microeconomics

12. Microeconomic Tools

Includes: Demand/Supply curves, Utility analysis, Cost/Revenue concepts, Market structures (competition,

monopoly, etc.)

Conclusion

Microeconomics helps analyze price mechanisms, resource allocation, and decision-making of individuals

and firms. It is foundational for understanding broader economic policies.

You might also like