#economics #microeconomics #macroeconomics
Microeconomics
Microeconomics is the study of particular markets and sections of the economy
(rather than the economy as a whole). It is concerned with the economic factors
that affect choices and the effects of changes in these factors on decision
makers. Microeconomics studies the economic behaviour of individuals,
households and fi rms in relation to these factors.
Topics covered in microeconomics include:
factors of production .
demand .
supply.
price elasticity of demand.
market failure.
economies and diseconomies of scale.
firms’ costs, revenues and objectives.
market structure.
Microeconomics attempts to explain what is likely to happen if certain economic
factors change. For example, if the demand for a fashionable product increases,
this will tend to raise its prices. If there is a major discovery of gold, its price
will tend to fall because gold supply is increased. Microeconomics tends to use
theory, rather than empirical evidence, to explain changes in individual markets
and industries.
Macroeconomics
Macroeconomics is the study of economic behaviour and decision making in the
whole economy, rather than individual segments of the economy. It looks at
aggregate variables, such as the demand for all goods and services in the
economy (national output) and the general level of prices in the economy
(inflation and deflation).
Topics covered in macroeconomics include:
the role of government.
redistribution of income.
fiscal policy.
monetary policy.
supply-side policies.
economic growth.
employment and unemployment.
inflation and deflation.
Macroeconomics attempts to explain what is likely to happen to the economy as a
whole if certain economic factors change. For example, a prolonged recession will cause unemployment in many industries, and result in negative
economic growth for the economy as a whole. Macroeconomics places greater
emphasis on using empirical data as evidence to explain changes in the economy,
such as booms and recessions
How do firms in monopolistic competition set their prices compared to those in perfect competition?
What factors determine the price elasticity of supply for a particular good?
How does the law of diminishing returns affect the marginal cost of production?
How does the concept of indifference curves help in understanding consumer choice?
What are the limitations of GDP as a measure of economic well-being?
How do central banks use monetary policy to control inflation?
What are the causes and consequences of cyclical unemployment?
How does government borrowing impact national savings and investment?
What are the benefits and drawbacks of free trade for an economy?
keywords to search
Consumer Surplus
Producer Surplus
Price Ceiling
Price Floor
Externalities
Public Goods
Opportunity Cost
Diminishing Returns