People have to make choices because of scarcity, the fact that they don’t have enough resources to satisfy all their wants. Economics studies how people allocate resources among alternative uses. Macroeconomics studies national economies, and microeconomics studies the behavior of individual people and individual firms. Economists assume that people work toward maximizing their utility, or happiness, and firms act to maximize profits.
But before we get started, the subject matter of economics is soo vast, that we could be here all day going over eco systems, market models, social equilibria and so on…. so we will be focusing on;
In sociology, a system is said to be in social equilibrium when there is a dynamic working balance among its interdependent parts. Each subsystem will adjust to any change in the other subsystems and will continue to do so until an equilibrium is retained.
GDP per capita:
GDP per capita is a measure of a country’s economic output that accounts for its number of people. It divides the country’s gross domestic product by its total population. That makes it a good measurement of a country’s standard of living. It tells you how prosperous a country feels to each of its citizens; Human Resource, Natural Resources, Capital Formation, Technological Development, Social and Political Factors etc
Eyeing the Four Basic Market Structures
An industry consists of all firms making similar or identical products. An industry’s market structure depends on the number of firms in the industry and how they compete. Here are the four basic market structures:
- Perfect competition: Perfect competition happens when numerous small firms compete against each other. Firms in a competitive industry produce the socially optimal output level at the minimum possible cost per unit.
- Monopoly: A monopoly is a firm that has no competitors in its industry. It reduces output to drive up prices and increase profits. By doing so, it produces less than the socially optimal output level and produces at higher costs than competitive firms.
- Oligopoly: An oligopoly is an industry with only a few firms. If they collude, they reduce output and drive up profits the way a monopoly does. However, because of strong incentives to cheat on collusive agreements, oligopoly firms often end up competing against each other.
- Monopolistic competition: In monopolistic competition, an industry contains many competing firms, each of which has a similar but at least slightly different product. Restaurants, for example, all serve food but of different types and in different locations. Production costs are above what could be achieved if all the firms sold identical products, but consumers benefit from the variety.