Study of Economics - Micro & Macro Economics
The report of economic science is divided past times the modern economists into ii parts viz. Micro economics as well as Macro economics. This partitioning is shown inwards the figure / nautical chart above. Micro economic science as well as Macro economics, both the terms were used inwards 1933 past times Prof. Ragnar Frisch from Oslo University of Norway.
The give-and-take micro has been derived from the Greek give-and-take `Mikros' i.e. pocket-size as well as the give-and-take macro has been derived from Greek give-and-take `Makros' i.e. large.
What is Microeconomics ? Meaning & Definition
Micro agency small. Thus, micro economic science analyses individualistic behaviour. It studies an private consumer, producer, cost of a particular commodity, household, etc.
According to Prof. K. E. Boulding, "Micro Economics is the report of particular firm, particular household, private prices, wages, incomes, private industries as well as particular commodities."
Subject Matter or Scope of Microeconomics
Micro Economics is concerned alongside the next topics :-
1. Commodity Pricing
Prices of private commodities are determined past times marketplace forces of demand as well as supply. So micro economic science makes demand analysis (individual consumer behaviour) as well as furnish analysis (individual producer behaviour).
2. Factor Pricing
Land, labour, working capital alphabetic lineament as well as entrepreneur, all factors contribute inwards production process. So they teach rewards inwards the shape of rent, wages, involvement as well as net respectively. Micro economic science deals alongside determination of such rewards i.e. element prices. So micro economic science is too called equally 'Price Theory' or 'Value Theory'.
3. Welfare Theory
Micro economic science deals alongside optimum resources allotment of available resources as well as maximisation of social welfare. It provides answers for 'What to produce?', 'When to produce?', 'How to produce?' as well as 'For whom it is to last produced?'. In short, Micro economic science guides for utilizing scarce resources of economic scheme to maximize populace welfare.
Characteristics / Features of Microeconomics
Classical economists ever insisted on micro economic science because they believed that it is amend to sympathise concept at private grade as well as hence teach for full general (or macro) level. E.g. showtime agreement private consumer conduct as well as hence analyzing the conduct of entire market.
1. Nature of Analysis
In micro economics, the conduct of private consumers as well as producers inwards item is analysed. It is report of dependent area affair from particular to general.
2. Method
Micro economic science divides the economic scheme into diverse pocket-size units as well as every unit of measurement is analysed inwards detail. It is a slicing method.
3. Scope
Micro economical analysis involves production pricing, element pricing as well as theory of welfare.
4. Application
Both theoretically as well as practically, micro economic science is useful inwards formulating diverse policies, resources allocation, populace finance, international trade, etc.
5. Nature of Assumptions
Assumption of Ceteris Paribus is ever made inwards every micro economical theory. It agency theory is applicable alone when 'other things beingness same'.
Uses / Importance / Advantages of Microeconomics
1. Individual Behaviour Analysis
Micro economic science studies conduct of private consumer or producer inwards a particular situation.
2. Resource Allocation
Resources are already scare i.e less inwards quantity. Micro economic science helps inwards proper resources allotment as well as utilization of resources to attain diverse types of goods as well as services.
3. Price Mechanization
Micro economic science decides prices of diverse goods as well as services on the footing of 'Demand-Supply Analysis'.
4. Economic Policy
Micro economic science helps inwards formulating diverse economical policies as well as economical plans to promote all circular economical development.
5. Free Enterprise Economy
Micro economic science explicate operating of a complimentary enterprise economic scheme where private has liberty to accept his ain economical decisions.
6. Public Finance
It helps the regime inwards fixing the revenue enhancement charge per unit of measurement as well as the type of revenue enhancement equally good equally the amount of revenue enhancement to last charged to the buyer as well as the seller.
7. Foreign Trade
It helps inwards explaining as well as fixing international merchandise as well as tariff rules, causes of disequilibrium inwards BOP, effects of factors deciding central rate, etc.
8. Social Welfare
It non alone analyse economical atmospheric condition only too studies the social needs nether dissimilar marketplace atmospheric condition similar monopoly, oligopoly, etc.
Disadvantages / Limitations of Microeconomics
1. Unrealistic Assumptions
Micro economic science is based on unrealistic assumptions, peculiarly inwards representative of total work supposition which does non be practically. Even conduct of 1 private tin non last generalised equally the conduct of all.
2. Inadequate Data
Micro economic science is based on the information dealing alongside private behaviour, private customers. Hence, it is hard to teach right information. So because of wrong information Micro Economics may provide inaccurate results.
3. Ceteris Paribus
It assumes that all other things beingness equal (same) only genuinely it is non so.
Glance on Notes of Microeconomics
- Micro economic science is that branch of economic science which studies individualistic behaviour. It concentrates on private consumer, producer, cost of a particular commodity, household, etc.
- The give-and-take micro has been derived from a Greek give-and-take 'Mikros' i.e. Small.
- The concept of 'Micro Economics' was introduced past times Prof. Ragnar Frisch as well as was developed past times MD Alfred Marshall.
- Micro economic science mainly concentrates on commodity pricing, element pricing as well as economical welfare.
- It is the 'Slicing Method' which divides the economic scheme into diverse pocket-size units as well as every unit of measurement is analysed inwards detail.
- It indicates the partial equilibrium analysis.
- It is based on 'Ceteris Paribus' assumption.
