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Microeconomics

Free Microeconomics study guide: 6 units with summaries, key ideas, flashcards and 80 practice questions with step-by-step solutions.

Lines up with: AP Microeconomics; CLEP Principles of Microeconomics.

Units

1. UNIT 01

   Basic economic concepts

   Scarcity forces choices; every choice has an opportunity cost, and specializing by comparative advantage creates gains from trade.
2. UNIT 02

   Supply and demand

   Supply and demand set market prices; elasticity measures responsiveness, and government interventions create surpluses, shortages and deadweight loss.
3. UNIT 03

   Production, cost and perfect competition

   Firms maximize profit where marginal revenue equals marginal cost, and in perfect competition entry and exit drive long-run economic profit to zero.
4. UNIT 04

   Imperfect competition

   Firms with market power restrict output and charge prices above marginal cost, creating deadweight loss.
5. UNIT 05

   Factor markets

   Firms hire inputs until the revenue an extra unit brings in equals what it costs.
6. UNIT 06

   Market failure and the role of government

   Markets fail when externalities or public goods make private and social costs or benefits differ, which can justify government action.