Marginal utility is the value gained from having one more of something, such as another dollar or car.

Supply and demand is how production and consumption change in response to price.

Consumer demand changes with price. For substitute and complementary goods, a price change for one good can impact demand for another.

Price elasticity measures how consumer demand responds to price changes. Price Elasticity of Demand (PED) is used to quantify it mathematically. Cross-Price Elasticity of Demand (CPED) does so across substitute goods.

Profit is total revenue - total costs. The costs include cost of production.

Economic choices are decisions made when there are multiple options. This can be complicated by Asymmetric information, which is when the involved parties don’t have equal knowledge.

When Economic choices intersect with scarcity, there is a spectrum of options between choosing only one option or only the other option. That spectrum is the Production Possibilities Frontier (PPF).

Buyers and sellers interact and transact in a market. The economic factors that drive the exchange of goods and services in a free market are called market forces.

To maximize the output of a market, producers minimize opportunity cost by developing specializations that maximize their comparative advantage.

There are four types of markets. The most fair are those with perfect competition. In reality, perfect competition is not common. If barriers to entry are very high, it can lead a monopoly or oligopoly. When competitors can easily enter and exit the market and provide differentiated products, monopolistic competition is more likely.

There also four Types of goods, categorized by whether or not they are Rival goods and Excludable goods. The four types are:

• Private goods
• Club goods
• Public goods
• Common goods

When a transaction impacts parties not involved in the transaction, it’s called an Externality. If Coase Theorem applies, a private solution can produce optimal results. Otherwise, a public solution such as cap and trade is necessary.