Thursday, 24 January 2013

Economics

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.
MICROECONOMICS VS. MACROECONOMICS
Microeconomics deals with behavior of individual units.
• When Consuming; How we choose what to buy
• When Producing; How we choose what to produce
• Markets: The interaction of consumers and producers.
Macroeconomics deals with analysis of aggregate issues:  
Economic growth  Inflation  Unemployment
Microeconomics is the foundation of macroeconomic analysis.
THEMES OF MICROECONOMICS
According to Mick Jagger & the Rolling Stones, “You can’t always get what you want”. Why  Not?
Limited Resources  Unlimited Wants  Allocation of Scarce Resources and Trade-offs In a planned economy
 In a market economy Microeconomics and Optimal Trade-offs
1. Consumer Theory
2. Workers
3. Theory of the Firm
Microeconomics and Prices
– The role of prices in a market economy
– How prices are determined

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