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This is the complete lecture note for ECO 201 INTRODUCTION TO MICROECONOMICS I. You can read it online below, open it in the full viewer, or download the PDF for offline study. It pairs with the course's video lectures, so you can read and watch together.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Course code: ECO 201 Course title: INTRODUCTION TO MICROECONOMICS I Course credit load: 2 unit Series 1: Introduction to Microeconomics and Partial Equilibrium Analysis Series 2: Demand and Supply Functions, Curves, and Elasticities Series 3: Consumer Behaviour and Indifference Curve Analysis Series 4: Market Outcomes, Surplus, and Government Price Control Series 5: Production Functions and Theories of Costs Series 1: Microeconomics and Partial Equilibrium Part 1 Introduction to microeconomics • Definition and scope of microeconomics • Division of economics into microeconomics and macroeconomics • Importance of microeconomics in understanding individual and market behaviour Part 2 Partial equilibrium analysis • Meaning of partial equilibrium • Basic microeconomic variables: demand and supply • Assumptions and limitations of partial equilibrium analysis Introduction Every day, individuals and organisations make choices about what to buy, what to sell, and how to allocate scarce resources. These decisions, though seemingly simple, form the foundation of economic activity. Microeconomics provides the tools to study these choices at the level of households, firms, and markets, helping us to understand how prices are determined and how resources are distributed. This Series sets the stage for your journey into microeconomics by introducing its scope and by examining the concept of partial equilibrium, which focuses on analysing one market at a time while holding other factors constant. The aim of this Series is to familiarise you with the basic principles of microeconomics and to equip you with the analytical framework of partial equilibrium analysis. By the end of the Series, you should be able to explain the scope of microeconomics, distinguish it from macroeconomics, and describe how partial equilibrium is used to study demand and supply in a simplified setting. We shall commence this Series by exploring the definition and scope of microeconomics, including its division from macroeconomics and its importance in analysing individual and market behaviour. Next, we will move on to partial equilibrium analysis, where we will examine
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS its meaning, the role of demand and supply as basic microeconomic variables, and the assumptions and limitations of this approach. To conclude, the Series will be rounded off with a discussion of how partial equilibrium provides a foundation for more advanced economic analysis. Series Learning Outcomes Upon completing this Series, you should be able to: • define microeconomics and explain its scope in relation to economic analysis (SLO 1.1), • distinguish between microeconomics and macroeconomics, highlighting their areas of focus (SLO 1.2), • explain the importance of microeconomics in analysing individual and market behaviour (SLO 1.3), • describe the meaning of partial equilibrium and its role in economic analysis (SLO 1.4), • identify the basic microeconomic variables of demand and supply within partial equilibrium analysis (SLO 1.5), and • evaluate the assumptions and limitations of partial equilibrium analysis in studying markets (SLO 1.6). 1.1 Introduction to Microeconomics Microeconomics is the branch of economics that studies the behaviour of individual households, firms, and markets. It focuses on how scarce resources are allocated, how prices are determined, and how consumers and producers make decisions. By examining these smaller units, microeconomics provides insights into the functioning of the wider economy. Fill in the blank: Microeconomics studies the behaviour of individual ______, firms, and markets. 1.1.1 Definition and scope of microeconomics Microeconomics is defined as the study of economic behaviour at the level of individuals and firms. It deals with issues such as demand, supply, pricing, production, and consumption. The scope of microeconomics includes analysing how consumers maximise satisfaction, how producers minimise costs, and how markets achieve equilibrium.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Fill in the blank: Microeconomics deals with issues such as demand, supply, pricing, ______, and consumption. --- 1.1.2 Division of economics into microeconomics and macroeconomics Economics is broadly divided into two branches: microeconomics and macroeconomics. While microeconomics focuses on individual units such as households and firms, macroeconomics studies the economy as a whole, including national income, inflation, unemployment, and economic growth. Both branches are interrelated, but microeconomics provides the foundation for understanding the larger aggregates studied in macroeconomics.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Fill in the blank: Macroeconomics studies the economy as a whole, including national income, inflation, and ______. --- 1.1.3 Importance of microeconomics in understanding individual and market behaviour Microeconomics is important because it helps us understand how individuals and firms make decisions in the face of scarcity. It explains how prices are determined in markets, how resources are allocated efficiently, and how government policies can influence market outcomes. For example, microeconomics can show how a tax on a product affects consumer demand and producer supply.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Fill in the blank: Microeconomics explains how prices are determined in markets and how ______ are allocated efficiently. --- Pilot questions 1.1 1. Microeconomics studies the behaviour of individual ______, firms, and markets. 2. Which branch of economics focuses on national income, inflation, and unemployment? 3. State one issue that microeconomics deals with. 4. What is the main difference between microeconomics and macroeconomics?
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS 5. Fill in the blank: Microeconomics explains how prices are determined in markets and how ______ are allocated efficiently. 1.2 Partial Equilibrium Analysis Partial equilibrium analysis is a fundamental tool in microeconomics. It focuses on the study of a single market in isolation, assuming that other markets remain unchanged. This approach allows economists to simplify complex interactions and to understand how demand and supply determine prices and quantities in one market at a time. Fill in the blank: Partial equilibrium analysis studies a single ______ in isolation while holding other markets constant. --- 1.2.1 Meaning of partial equilibrium Partial equilibrium refers to the analysis of equilibrium in one market without considering interactions with other markets. It assumes that changes in one market do not affect others, which makes it easier to study the forces of demand and supply. This method is particularly useful when focusing on specific goods or services.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Fill in the blank: Partial equilibrium assumes that changes in one market do not affect ______ markets. --- 1.2.2 Basic microeconomic variables: demand and supply The two key variables in partial equilibrium analysis are demand and supply. Demand is defined as the quantity of a good or service that consumers are willing and able to purchase at different prices. Supply is defined as the quantity of a good or service that producers are willing and able to offer for sale at different prices. The interaction of demand and supply determines the equilibrium price and quantity in the market.
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