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Microeconomics

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4 views

Microeconomics

Uploaded by

gopigopi2726
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Microeconomics

An Overview of Fundamental Concepts and


Principles
Introduction
This presentation explores key concepts
in microeconomics, focusing on market
dynamics, consumer behavior, and the
principles of supply and demand.
01
Microeconomi
cs
Definition and Scope
Microeconomics explores not only the decision-making processes of consumers and firms
but also how these decisions influence market outcomes. It delves into concepts such as
opportunity cost, marginal utility, and diminishing returns, providing a framework for
understanding how individual choices impact broader economic trends. By analyzing the
factors that affect consumer behavior and production choices, microeconomics helps
identify the forces driving efficiency and competition within markets.
Principles of
Microeconomics
Microeconomics operates on several core principles, including
the law of supply and demand, consumer behavior theories, and
the role of market structures. These principles help explain how
prices are formed and how resources are allocated in the
economy.
Market
Structures
Market structures describe the competitive environment
in which firms operate. The main types include perfect
competition, monopolistic competition, oligopoly, and
monopoly, each characterized by the number of firms in
the market and the degree of competition.
02

Demand
Law of Demand
The law of demand states that, all else being equal, as the
price of a good decreases, the quantity demanded
increases, and vice versa. This principle illustrates the
inverse relationship between price and quantity demanded.
Factors
Affecting
Demand
Demand is influenced by various factors, including
consumer preferences, income levels, prices of
related goods, and number of buyers in the market.
Understanding these factors helps predict how
demand shifts with changes in market conditions.
Elasticity of Demand
Elasticity of demand measures how responsive the quantity
demanded of a good is to a change in its price. It includes
price elasticity, income elasticity, and cross-elasticity, which
are essential for businesses in setting pricing strategies.
03

Supply
Law of Supply
The law of supply states that, all other factors
being equal, an increase in price results in an
increase in quantity supplied. Producers are more
willing to sell more goods at higher prices, leading
to a direct relationship between price and supply.
Factors Affecting
Supply
Supply is affected by several factors, including production
costs, technology, the number of suppliers, and government
regulations. Changes in any of these factors can lead to shifts
in the supply curve, impacting the overall market supply.
Elasticity of Supply
Elasticity of supply measures how responsive the quantity
supplied is to a change in price. It can be classified as
elastic, inelastic, or unitary based on the degree of change
in price and the resultant change in quantity supplied.
04
Market
Equilibrium
Equilibrium Price
Equilibrium price is the price at which the quantity of
goods supplied equals the quantity demanded. At this
price, there is no surplus or shortage in the market, and
it serves as a stable point where the market clears.
Effects of
Demand and
Supply Shifts
Shifts in demand or supply can lead to changes in
equilibrium price and quantity. For instance, an
increase in demand typically raises both equilibrium
price and quantity, while an increase in supply may
lower the price and increase the quantity.
Role of Government in
Market
The government can intervene in markets to correct failures,
stabilize prices, and protect consumers. Policies such as
subsidies, taxes, and price controls can influence both supply
and demand, impacting overall market equilibrium.
05
Consumer
Behavior
Utility Theory
Utility theory explains how consumers allocate their
income to maximize satisfaction. It posits that
consumers make choices based on the utility or
satisfaction they derive from goods and services.
Budget
Constraints
Budget constraints refer to the limitations on
consumer choice imposed by income levels and
prices of goods. Consumers must make decisions
about how to allocate their finite resources
among various options.
Consumer Choice
Theory
Consumer choice theory examines how individuals
make decisions about purchasing goods and services
based on preferences, budget constraints, and the
utility derived from different choices.
Conclusions
Microeconomics provides essential insights into the
behaviors of consumers and producers, the dynamics
of supply and demand, and how market forces
determine prices and allocations in the economy.
Thank you!
Do you have any questions?

CREDITS: This presentation template was created by Slidesgo, and


includes icons by Flaticon, and infographics & images by Freepik

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