Microeconomics is mostly a handful of graphs and ideas that keep coming back. These guides explain each one clearly — why the curves move the way they do, and what the diagrams actually mean.
The law of demand says price and quantity move in opposite directions. Here is the real reason, split into the substitution and income effects.
Compute price elasticity of demand with the midpoint method, then read the result — elastic, inelastic, or unit elastic — and what it does to revenue.
Consumer and producer surplus are two triangles on every supply-and-demand graph. Learn to find both and compute their areas.
Marginal cost and average cost come from the same numbers. Here is the difference, and why the curves cross where they do.
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Deadweight loss is the surplus destroyed when a market trades less than the efficient quantity. Here is what the triangle actually measures.
Perfect competition and monopoly sit at opposite ends of the market-structure spectrum. One graph difference drives every other contrast.
The profit-maximizing quantity is where MR equals MC. This walkthrough finds it in a table and on a graph, then checks whether it earns a profit.
An externality is a cost or benefit that escapes the price. Here is why that makes markets misprice — and the three standard fixes.
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The prisoner's dilemma explains why two rational parties reach an outcome worse for both. Here it is, built from a payoff matrix.
A microeconomics exam tests graphs, formulas, and calculations under pressure. Here is how to study for it the way the subject rewards.
Two elasticities students keep mixing up. Here are the formulas, what each measures, and how the sign of the answer tells you the type of good.
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Price floors and ceilings sound symmetrical but bind on opposite sides of equilibrium. Here is where each one binds and the surplus or shortage it creates.
A per-unit tax opens a wedge between the buyer's price and the seller's price. Elasticities, not the statute, decide who bears more of the burden.
Short-run cost curves sit on top of a fixed input; the long-run average cost curve is the envelope of all of them. Here is what that means in practice.
Oligopolies behave the way game theory predicts. Read a payoff matrix, find the Nash equilibrium, and see why cooperation between firms is hard to sustain.
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Monopolistic competition sits between perfect competition and monopoly: many firms, each with a slightly different product and a downward-sloping demand curve.
Wages come from labor supply and labor demand. The demand side is set by the marginal revenue product of labor — here is how to use it to find equilibrium.
Public goods are non-rival and non-excludable, which is why markets underprovide them. Here is the free-rider problem and the standard fixes.
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Two parties can both gain from trade even when one is better at everything — as long as their opportunity costs differ. Here is the full worked example.
The optimal consumption bundle sits where an indifference curve is just tangent to the budget line. Here is the math behind that tangency, worked out.
The budget line rotates with a price change and shifts parallel with an income change. Here is what each move does to the consumer's optimal bundle.
Average cost falls and then rises as a firm grows. Here are the real sources of economies and diseconomies of scale, and what they mean for industry structure.
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A Nash equilibrium is a cell where no player wants to switch alone. Best-response checking finds every one — here it is, with three worked games.
Positive economics describes how the world works; normative economics says how it should be. Three quick tests for telling them apart on an exam.
An own-price change slides you along a curve; everything else shifts the curve. Here is the full list of shifters for both supply and demand.
