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SKY EDUCATON
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1
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EXPLAIN SCOPE OF MICRO-ECONOMICS
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Micro economics thus deals with a small part of the national economy
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Following is the Scope of Micro-Economics
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Micro economics is
concerned with demand analysis i
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individual consumer behaviour, and supply analysis i
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individual producer
behaviour
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Micro economics helps in determining the factor rewards for land, labour, capital, and entrepreneur in the form of rent,
wages, interest, and profit respectively
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Efficiency in the allocation of resources is
attained when it results in maximization of satisfaction of the people
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• Efficiency in consumption : Efficiency in consumption means distribution of produced goods and services among
the people for consumption in such a way as to maximize total satisfaction of the society
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EXPLAIN FEATURES OF MICRO-ECONOMICS
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Micro economics thus deals with a small part of the national economy
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Following are the Features of Micro-Economics: (SHORTCODE: LAB USP)
1) Limited Scope :
The scope of micro economics is limited to only individual units
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2)Analysis of Market Structure :
Micro economics analyses different market structures such as Perfect Competition, Monopoly, Monopolistic
Competition, Oligopoly etc
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These assumptions make the analysis
simple
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The term 'marginal' means change brought in
total by an additional unit
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Producers and consumers
take economic decisions using this principle
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It splits or divides the whole economy into small individual units and then studies
each unit separately in detail
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7) Price Theory :
Micro economics deals with determination of the prices of goods and services as well as factors of production
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8) Partial Equilibrium :
Equilibrium is the balance between two factors
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e
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It
isolates an individual unit from other forces and studies its equilibrium independently
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Q
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EXPLAIN MICRO-ECONOMICS
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ANS: Micro means a small part of a thing
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It
studies the economic actions and behaviour of individual units such as an individual consumer, individual producer or a
firm, the price of a particular commodity or a factor etc
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These decisions are related to
the determination of cost of production, determination of prices of goods, maximization of output and profit, etc
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It also studies how taxes affect social welfare
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A free market economy is that economy
where the economic decisions regarding production of goods, such as ‘What to produce?, How much to produce?, How
to produce? etc
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There is no intervention by the Government or any other agency
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5) Price Determination :
Micro economics explains how the prices of different products and various factors of production are determined
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It has
made a valuable contribution to economics by developing various terms, concepts, terminologies, tools of economic
analysis etc
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SKY EDUCATON
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EXPLAIN SCOPE OF MACRO-ECONOMICS
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It deals with the total
employment, national income, national output, total investment, total consumption, total savings, general price level
interest rates, inflation, trade cycles, business fluctuations etc
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Following is the Scope of Macro-Economics
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To understand, how the level of employment is
determined, we have to study the consumption function and investment function
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ii) Theory of General Price Level and Inflation :
Macro economic analysis shows how the general price level is determined and further explains what causes fluctuations
in it
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iii) Theory of Growth and Development :
Macro economics consists of the theory of economic growth and development
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It also suggests strategies for accelerating growth and development
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Q
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EXPLAIN MACRO-ECONOMICS
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ANS: Macro economics is the branch of economics which analyses the entire economy
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Thus, macro economics is the study of aggregates
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(SHORTCODE: 3G SLIP)
1) General Equilibrium Analysis :
Macro economics deals with the behaviour of large aggregates and their functional relationship
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2) General Price Level :
Determination and changes in general price level are studied in macroeconomics
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3) Growth Models :
Macro economics studies various factors that contribute to economic growth and development
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These growth models are used for studying economic development
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It is concerned with the aggregate concepts such as
national income, national output, national employment, general price level, business cycles etc
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According to Prof
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” This reveals the difference between
micro economics and macro economics
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Macro economics deals with aggregate demand and aggregate supply
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e
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7) Interdependence :
Macro analysis takes into account interdependence between aggregate economic variables, such as income, output,
employment, investments, price level etc
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8) Policy-oriented :
According to Keynes, macro economics is a policy oriented science
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Q
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EXPLAIN MACRO-ECONOMICS
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ANS: Macro economics is the branch of economics which analyses the entire economy
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Thus, macro economics is the study of aggregates
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(SHORTCODE: PerFect LENS)
1) Performance of an Economy :
Macro economics helps us to analyse the performance of an economy
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2) Functioning of an Economy :
Macro economic analysis gives us an idea of the functioning of an economic system
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3) Level of Employment :
Macro economics helps to analyse the general level of employment and output in an economy
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It suggests important steps to
achieve economic development
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Without a study of national income, it is not possible to formulate correct economic policies
7) Study of Macro economic Variables :
To understand the working of the economy, study of macro economic variables are important
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