1.1 Microeconomics: demand, production, markets and factor pricing notes

1. 1.1.1Demand: law of demand, determinants, utility and consumer equilibrium

   Demand is the quantity a buyer is willing and able to buy at each price; it falls as price rises (law of demand), and a consumer is in equilibrium when the last rupee spent on every good gives the same marginal utility (or when MRS equals the price ratio).

   Advanced · 8 min · Read here
2. 1.1.2Elasticity of demand and supply: price, income and cross elasticity and their measurement

   Elasticity measures how strongly quantity responds to a change in price, income or another good's price: percentage change in quantity ÷ percentage change in the cause.

   Advanced · 8 min · Read here
3. 1.1.3Production: factors, law of variable proportions and returns to scale

   Production turns inputs into output: in the short run adding a variable factor to a fixed one gives first rising, then diminishing, then negative returns (law of variable proportions), while in the long run changing all inputs together gives increasing, constant or decreasing returns to scale.

   Advanced · 8 min · Read here
4. 1.1.4Costs and revenue: short-run and long-run cost curves, average and marginal revenue

   Short-run costs split into fixed and variable parts and give U-shaped AVC, ATC and MC curves; the long-run average cost curve is the envelope of short-run curves; revenue is TR = P × Q, AR = price and MR = the change in TR from one more unit.

   Advanced · 10 min · Read here
5. 1.1.5Market structures and price determination: perfect competition, monopoly, monopolistic competition and oligopoly

   Every profit-maximising firm produces where MR = MC (with MC rising); what differs across market structures is the number of sellers, the kind of product, entry conditions and so whether price equals MC and whether supernormal profit survives in the long run.

   Advanced · 12 min · Read here
6. 1.1.6Factor pricing: rent, wages, theories of interest and profit

   Land, labour, capital and enterprise earn rent, wages, interest and profit; the general rule is that a firm pays a factor up to the value of its marginal product, and special theories explain each reward.

   Advanced · 12 min · Read here

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