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Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants. Scarcity is the central problem: because resources are limited while h...
Elasticity measures the responsiveness of one variable to changes in another. The most common form is price elasticity of demand, calculated as the percentage change in quantity de...
Consumer theory models how individuals make choices to maximize satisfaction. Utility is the abstract measure of satisfaction from consuming a good or service, and marginal utility...
A production function describes how outputs arise from inputs. The marginal product of labor is the additional output produced by employing one more worker, and the law of diminish...
Game theory studies strategic interaction among rational agents. In the prisoner's dilemma, individual rationality leads to a worse collective outcome, illustrating how uncooperati...
Factors of production include labor, capital, land, and entrepreneurship. The marginal revenue product of an input is the additional revenue generated by employing one more unit of...
Welfare economics evaluates economic outcomes against social welfare criteria. The central efficiency benchmark is Pareto efficiency, an allocation in which no one can be made bett...
Comparative advantage explains why countries, individuals, and firms benefit from specialization and trade. A producer has an absolute advantage when it can produce more of a good...