The cost of anything is what you have to give up to get it. Economists call this 'opportunity cost'. It is the value of the next best alternative that must be forgone in order to engage in the action. We say that the cost of any action is measured in terms of forgone opportunities. When economists are considering costs, they are referring to opportunity costs and not simply money or explicit costs. These costs arise because choices are made, in the face of scarcity.
Microeconomics is an examination of individual agents, buyers and sellers real or corporate engaging in the buying and selling of factors of production, goods services and or experiences in a market which in certain conditions and subject to different constraints and systems may produce the most efficient and satisfactory use of all the Globe's resources for mankind.
Income elasticity of demand measures the responsiveness (in terms of percentages) of quantity demanded to changes in income.
% Change in Income ΔY × 100
Y
Q5. Define the Law of Equi Marginal Principle
Law of Egui Marginal returns state that utility is maximised when the utility of the last Euro spent on each good is the same.
MUx=MUy
Px Py
Q6. What is the long run
The long-run is a period of time when all the factors of production can be varied in quantity. The long-run production function shows combinations of inputs and the quantities of output produced. There are three possible relationships between inputs and outputs. The long-run production function may exhibit all three relationships over the range of production.
Q7. What are externalities
The efficiency of the market is based on certain assumptions. Behavioural, ethical and environmental and that market equilibrium represents the maximum utility and profit but also the optimum social outcome for all participants. An Externality is the failure of the market transaction to take all...

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