Microeconomics Study Guide

Microeconomics studies individual economic units - consumers, firms, and markets - and the decisions they make. It examines how prices are determined by supply and demand, how consumers maximise utility given budget constraints, and how firms choose output levels and pricing strategies to maximise profit. Market structures range from perfect competition to monopoly, each generating different outcomes for consumers and producers. Microeconomics also analyses market failures - situations where unregulated markets produce inefficient outcomes - such as externalities, public goods, and information asymmetry. This sub-category tests knowledge of core microeconomic concepts: demand and supply curves, elasticity, consumer and producer surplus, market equilibrium, competitive and monopolistic markets, and the principles governing how individuals and firms make economic decisions.