Economics

In economics, demand isn't just wanting something; it's wanting it and being able to afford it. The Law of Demand states that, all else being equal, as the price of a good increases, the quantity demanded will decrease, and vice versa. This usually holds true because higher prices make things less affordable or encourage you to find substitutes.

Economics is broadly split into two main areas: microeconomics and macroeconomics.

The Theory of the Firm explains how a business makes decisions. Its primary goal is typically profit maximization. Profit is simply Total Revenue (TR) - Total Cost (TC).

To make something, firms use inputs (labor, capital, raw materials) to create outputs (goods or services). This is described by a production function. Initially, adding more inputs might lead to increasing output at an accelerating rate, but eventually, you hit diminishing returns, where adding more inputs yields smaller and smaller increases in output.