The Complete Microeconomics Course: Theory & Practice

Understand the difference between demand and desire in microeconomics, where demand requires willingness and purchasing power, while desire is just willingness, illustrated by bread and a BMW.

Learn the difference between market demand and individual demand in microeconomics. See how one household's willingness to buy at different prices compares to the total demand of all households.

Explore the law of demand, showing that holding everything else constant, price and quantity demanded move inversely, described by q_d = a - b p and the demand curve.

Learn how the demand curve shifts when non-axis factors like income, fashion, taste, weather, or population change, while price changes move you along a single demand curve.

Identify the five key factors that shift the demand curve—income, price of related goods, tastes, population, and expected future prices—and distinguish them from movements along the curve.

Supply is produced and sent to the market for sale at a specific price. Stock consists of goods produced but not yet in the market, with no price set.

Explain extension and contraction of supply, where price rises increase quantity supplied and price falls decrease it, illustrated by movement along the supply curve and the idea of shifting.

Rise and fall of supply occur with no price change; rise means higher supply, fall means lower supply. Non-price factors like more producers or new technology shift the supply curve.

Learn the difference between movement along the supply curve, driven by price changes, and shifting of the supply curve, caused by non-price factors like technology or new producers.

Explore how five factors shift the supply curve—input prices, technology, substitute goods in production, number of firms, and expected future prices—and how each changes supply left or right.

Examine price elasticity of demand, its relation to price, and how to calculate it with the formula E_p, percentage change in quantity demanded divided by percentage change in price.

Unitary elastic demand occurs when price and quantity demanded change by the same percentage, yielding an elasticity of one, with a negative relationship between price and demand.

Examine less elastic demand, where elasticity is below one; price changes trigger smaller quantity changes and the elasticity formula shows the negative price-quantity relationship.

Explore perfect inelastic demand, where price changes do not affect quantity demanded, yielding a zero elasticity and a vertical demand curve, with salt as a real-world example.

Normal goods increase in demand when income rises and decrease when income falls, reflecting a positive income effect and a negative price effect.

Explore Giffen goods, where the law of demand fails as price rises boost demand, while price falls reduce demand; understand the positive price effect and negative income effect.

Inferior goods have a negative relationship with income and price, so demand falls when income or price rises and rises when income falls.

Learn how to determine equilibrium price and equilibrium quantity by equating demand and supply equations, solving for price, and confirming a market equilibrium at price 8 and quantity 52.

Explore cardinal and ordinal theories of consumer behavior, including the indifference-curve approach, and explain utility as a subjective, relative concept with initial, total, and marginal utility.

Learn the ordinal approach to utility via indifference curves, where different two goods bundles yield the same satisfaction, under assumptions of rationality, numerical utility, diminishing MRS, and consistency.

Explore properties of indifference curves, including downward slope, convexity to the origin, non-intersection, and higher curves signaling greater satisfaction.

Fixed cost remains unchanged with output, such as rent or wages. Variable cost rises with output, like electricity, labor, and raw materials.

Explore marginal cost, the extra cost of producing one more unit, and its formula as change in total cost divided by change in quantity, denoted by M.S., including concise example.

Learn to calculate marginal cost by dividing the change in total cost by the change in quantity. Plot the marginal cost graph by mapping MC values against quantity.

Define total cost as the sum of fixed cost and variable cost in production, with marginal cost as the slope of the total cost curve.

Learn to construct the total cost graph by plotting total cost on the y-axis against output on the x-axis and joining the points to form the total cost curve.

Learn to calculate average fixed cost as fixed cost divided by quantity and average variable cost as variable cost divided by quantity, then plot AFC and AVC.

Compare explicit and implicit costs, showing explicit costs on the balance sheet while implicit costs, or opportunity costs, are unrecorded, shaping economic versus accounting profit and sunk costs.

Explore how fixed cost remains constant while variable cost changes with output, and learn to compute total cost, average costs, and marginal cost using a unit-by-unit cost table.

Extract fixed cost and variable cost from the total cost function, then compute average fixed cost, average variable cost, and average cost using quantity Q.

Learn average revenue and marginal revenue, where average revenue equals price and is total revenue divided by quantity, while marginal revenue is change in total revenue per unit sold.

Explore how total revenue, average revenue, and marginal revenue are defined and calculated under perfect competition, linking revenue to price and quantity.

Explore how firms in perfect competition decide output by equating marginal revenue and marginal cost. Maximize profit where MC intersects MR from below, with price, AR, and MR equal.

Learn how a farm earns normal profit under perfect competition when average revenue equals average cost, and determine output where marginal cost equals marginal revenue and price equals average revenue.

Explain how abnormal profit arises under perfect competition when average revenue exceeds average cost, with MC = MR determining equilibrium output and a shaded area representing profit.

Explore normal losses under perfect competition, where average variable cost equals average revenue, MC equals MR determine output, and ATC lies above AR.

Illustrates abnormal loss under perfect competition when average fixed cost equals average revenue, showing marginal cost equals marginal revenue and the shaded loss area.

Explore why firms shut down under perfect competition when average fixed cost exceeds average revenue, using mc, afc, and avc analysis.