Learn how the personal, household, business economic & finance works.
I think everyone should learn the basic concept of microeconomics to manage and understand their household, finance, and business, or just for general knowledge and love of learning.
Microeconomics focuses on how individuals, households, and firms make those decisions.
Economic resources are scarce. Faced with this scarcity, we must choose how to allocate our resources.
Economics is the study of how societies choose to do that.
Scarcity: The fact is that there is a limited amount of resources to satisfy unlimited wants — e.g. limited amount of land to build houses 🏠 .
Economics resources: The main 4 things we need to produce goods and services. For example — land, labor, capital, and technology.
Here Land means raw materials like — fish, soil, minerals, and energy resources.
Labor means the effort put out by workers in the creation of goods and services. The number of employees and hours worked etc.
Capital Physical goods that are produced and used to produce other goods.
Examples of capital would be machinery, technology, tools, etc
Here Technology (entrepreneurship) means — The ability to combine other productive resources into goods and services.
Economic Model
Economic models are a way of taking complicated ideas and events, and then breaking them down into their most important characteristics.
Economists rely on models because it’s impossible to capture the full complexity of human interaction.
A model is a simplification of a concept or process that is used to better understand that process. Like assuming and neglecting other variables, real-world entity to simplify things.
For example, a map is a model of how roads are laid out and where they intersect. There are lots of things we removed to develop the map. Only our intention information (like direction ) that is required is present.
TL;DR
- Microeconomics: focuses on how individuals, households, and firms make resource allocation decisions.
- Economics resources: Land, Labor, Capital, and Technology.
- Scarcity: Limited number of resources that has unlimited want. That’s Why proper resource allocation is required.
- Economic Models: simplification of a concept or process that is used to better understand the resource allocation process.
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