Economics

Economics is the study of how individuals, businesses, governments, and societies allocate scarce resources to satisfy unlimited wants. It examines production, distribution, and consumption of goods and services.

Scarcity refers to the fundamental economic problem that resources are limited while human wants are unlimited, forcing choices about resource allocation.

Opportunity cost is the value of the next best alternative forgone when making a choice. It highlights the trade-offs inherent in decision-making.

Positive economics describes 'what is' using facts and testable statements, while normative economics involves 'what ought to be' based on opinions and value judgments.

Microeconomics studies individual markets, households, and firms, while macroeconomics examines the economy as a whole, including growth, inflation, and unemployment.

A PPF is a curve showing the maximum possible output combinations of two goods or services an economy can produce with available resources and technology. Points inside indicate inefficiency; outside are unattainable.

The law of demand states that, ceteris paribus, as the price of a good rises, the quantity demanded falls, illustrated by a downward-sloping demand curve.

Changes in income, tastes, prices of related goods (substitutes/complements), expectations, or number of buyers shift the demand curve; price changes cause movement along the curve.

The supply curve shows the quantity of a good producers are willing to sell at different prices, typically upward-sloping due to higher incentives at higher prices.

The law of supply states that, ceteris paribus, as the price of a good rises, the quantity supplied increases.

Changes in input prices, technology, number of sellers, expectations, or government policies (taxes/subsidies) shift the supply curve; price changes cause movement along it.

Market equilibrium occurs where supply equals demand, determining the equilibrium price and quantity with no shortage or surplus.