Time: 63 hours
College Credit Recommended
When we talk about the economy, we refer to the marketplace or economic system where our choices interact with one another. In this course, we discuss how and why we make economic decisions, and how our choices affect the economy. Think about each of the following units as a building block, where the concepts you learn will enable you to understand the material you discover in the next unit. By the end of this course, you will have a strong grasp on the major issues microeconomists face, including consumer and producer behavior, the nature of supply and demand, the different kinds of markets and how they function, and the welfare outcomes of consumers and producers. We also explore how these formal principles and concepts apply to real-world issues. The scope and emphasis of this course go beyond a general understanding of microeconomics to incorporate the core concepts of the overall field of economics.
First, read the course syllabus. Then, enroll in the course by clicking "Enroll me in this course". Click Unit 1 to read its introduction and learning outcomes. You will then see the learning materials and instructions on how to use them.
Unit 1: Introduction to EconomicsBefore we dive into the principles of microeconomics, we need to define some of the major ideas that lie at the heart of economics. What is the economic way of thinking? What do economists mean when they discuss market structure and the invisible hand? In this unit we identify and define these terms before addressing the driving principles behind microeconomics: the idea that individuals and firms (economic agents) make rational choices based on self-interest. These decisions are necessary, because resources are scarce. In other words, no good or item is infinitely available. We will also introduce a number of economic models, the assumptions and constraints associated with each, and the ways they help us better understand real-life situations.
Completing this unit should take you approximately 6 hours.
Unit 2: Supply and Demand
In this unit we introduce the ceteris paribus assumption, which is crucial to building correlations among economic variables. When using ceteris paribus, we assume that all variables - with the exception of those in explicit consideration - will remain constant. We then examine the supply and demand models and the resulting market equilibrium that occurs where the supply curve and the demand curve intersect. We also explore what causes movements along the curve and the set of factors that cause the curves to shift, affecting both price and quantity, before discussing the meaning and significance of elasticity.
Next, we explore what happens when a market fails to produce a reasonable equilibrium. This situation typically occurs when either the market is not competitive or complete, or its participants are ill-informed. We evaluate various ways the government can address these failures and begin to understand the intricate relationship between government and economics.
Completing this unit should take you approximately 12 hours.
Unit 3: Markets and Individual Maximizing Behavior
In this unit, we examine how markets increase overall welfare via the concepts of consumer and producer surplus. We explore how the concepts of marginal costs and benefits affect a company's decision to make one more, or one less, product.
We have already learned that, at its most fundamental level, microeconomics is the study of how we make decisions. To expand on this point, we need to distinguish between the either/or and how much decision. This concept is useful when you look more closely at why firms produce certain levels of output, taking opportunity cost and sunk (fixed) cost into consideration.
This unit concludes with the causes and ramifications of income inequality. While there is much debate about how to address long-term inequality, economists can objectively measure the problem's scope and offer options to manage this economic phenomenon. Protracted poverty and inequality can cause long-term harm to an economy's development.
Completing this unit should take you approximately 8 hours.
Unit 4: The ConsumerIn this unit we focus on the individual consumer and the characteristics that compel them (to choose) to spend income on goods and services. The consumer experiences utility - a measure of satisfaction - with every purchase they make, and economists measure this utility to determine a consumer's optimal rate of consumption. The theory of demand is derived from the theory of consumer behavior presented in this unit. We can explain an individual's demand function by two approaches that help illustrate personal preferences: utility analysis and indifference analysis. We explore these concepts more fully in this unit.
Completing this unit should take you approximately 10 hours.
Unit 5: The Producer
In this unit we learn about one of the most important economic agents: the producer. The producer (a company or firm) is responsible for creating the production function (output) and is subject to various cost measures and the results of diminishing returns. We explore these ideas more fully as we delve into the relationship between quantity of input and quantity of output. We will discuss how and why a firm's costs may differ in the short run versus the long run.
Completing this unit should take you approximately 8 hours.
Unit 6: Market Structure: Competitive and Non-Competitive Markets
This unit introduces the concept of perfect competition, an ideal model that serves as a benchmark economists use to analyze real-world market structures. The model of perfect (or pure) competition creates an efficient allocation of resources. However, unregulated markets (which are central to perfect competition) often fail to create desired outcomes in the real world. Economists refer to these situations as examples of imperfect competition. As we study the model of perfect competition, we also move on to what many consider the antithesis of perfect competition, the monopoly model. Then, we will explore imperfect competition and two models that fall under it: monopolistic competition and oligopoly. We also touch on game theory, when we discuss the prisoner's dilemma model and the Nash equilibrium.
Completing this unit should take you approximately 16 hours.
Unit 7: Public Finance, Public Choice, and the Environment
In this unit, we explore the role of the government in producing those goods and services that the market system is unable to produce in an efficient way, like police and emergency services. The study of the environment is also covered in this unit with particular attention to public solutions to environmental problems. The rational voter is also studied in this unit for understanding how public choices are made. Lastly, the Coase Theorem is covered to learn how property rights can be defined as tool for solving environmental problems or other market failures.
Completing this unit should take you approximately 9 hours.
This study guide will help you get ready for the final exam. It discusses the key topics in each unit, walks through the learning outcomes, and lists important vocabulary. It is not meant to replace the course materials!
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Certificate Final Exam
Take this exam if you want to earn a free Course Completion Certificate.
To receive a free Course Completion Certificate, you will need to earn a grade of 70% or higher on this final exam. Your grade for the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again as many times as you want, with a 7-day waiting period between each attempt.
Once you pass this final exam, you will be awarded a free Course Completion Certificate.
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Saylor Direct Credit
Take this exam if you want to earn college credit for this course. This course is eligible for college credit through Saylor Academy's Saylor Direct Credit Program.
The Saylor Direct Credit Final Exam requires a proctoring fee of $5. To pass this course and earn a Proctor-Verified Course Certificate and official transcript, you will need to earn a grade of 70% or higher on the Saylor Direct Credit Final Exam. Your grade for this exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again a maximum of 3 times, with a 14-day waiting period between each attempt.
We are partnering with SmarterProctoring to help make the proctoring fee more affordable. We will be recording you, your screen, and the audio in your room during the exam. This is an automated proctoring service, but no decisions are automated; recordings are only viewed by our staff with the purpose of making sure it is you taking the exam and verifying any questions about exam integrity. We understand that there are challenges with learning at home - we won't invalidate your exam just because your child ran into the room!
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Once you pass this final exam, you will be awarded a Credit-Recommended Course Completion Certificate and can request an official transcript.
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