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Introduction to Economics: Micro vs Macro

The document discusses microeconomics and macroeconomics. [1] Microeconomics studies individual markets, consumers, firms, and industries, focusing on supply and demand at the individual level. [2] Macroeconomics looks at whole economies and issues like unemployment rates, GDP, and the effects of trade on a national scale. [3] The key difference is that microeconomics examines small economic units, while macroeconomics analyzes entire economic systems and the connections between their parts.

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Petal Alexander
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106 views2 pages

Introduction to Economics: Micro vs Macro

The document discusses microeconomics and macroeconomics. [1] Microeconomics studies individual markets, consumers, firms, and industries, focusing on supply and demand at the individual level. [2] Macroeconomics looks at whole economies and issues like unemployment rates, GDP, and the effects of trade on a national scale. [3] The key difference is that microeconomics examines small economic units, while macroeconomics analyzes entire economic systems and the connections between their parts.

Uploaded by

Petal Alexander
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Lecture one

Read pages 8-9 in your assigned text

It’s the study of scarcity, the study of how people use resources and respond to incentives, or the
study of decision-making. It often involves topics like wealth and finance, but it’s not all about
money.

Economics is the social science that studies the production, distribution, and consumption of
goods and services.

Explain the branches of economics; Branches of Economics:

(a) Microeconomics; and,

(b) Macroeconomics.

Microeconomics is the study of economics at an individual, group or company level.


Microeconomics focuses on issues that affect individuals and companies. This could mean
studying the supply and demand for a specific product, the production that an individual or
business is capable of, or the effects of regulations on a business.

Macroeconomics, on the other hand, is the study of a national economy as a whole.


Macroeconomics focuses on issues that affect the economy as a whole. Some of the most
common focuses of macroeconomics include unemployment rates, the gross domestic product of
an economy, and the effects of exports and imports.

As micro means very small or millionth part, Microeconomics is the branch of economics that
deals with the study of particular markets and the segments of a firm. It deals with the study of a
particular household, a particular firm or industry, wages, incomes, labour markets, consumer
behaviour etc.

Micro economics is concerned with:

1. Supply and demand in individual markets and how to reach the equilibrium

2. Individual consumer behaviour. e.g. Cosumer choicee theory

3. Individual labour markets – e.g. demand for labour, wage determination

4. Externalities arising from production and consumption.

As macro means large or whole, Macroeconomics is the study of whole economy, i.e. all the
units combined together. It is the study of the economic system as a whole, total production,
total consumption, total savings and total investment. As its analyzes provide full figure or
complete reflection of a country, its subjects is about national income, national production etc.
Macro economics is concerned with

1. Monetary / fiscal policy. e.g. what effect does interest rates have on whole economy?

2. Reasons for inflation, and unemployment

3. Economic Growth (GDP, GNP etc.)

4. International trade and globalisation

5. Reasons for differences in living standards and economic growth between countries.

6. Government borrowing

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