File Name: introduction to micro and macro economics .zip
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These solutions for Introduction To Micro Economics are extremely popular among Class 12 Commerce students for Economics Introduction To Micro Economics Solutions come handy for quickly completing your homework and preparing for exams. Fill in the blanks with appropriate alternatives given in the brackets.
Since then, these terms are used by economists all over the world. Microeconomics is the study of behaviour of individual units in an economy such as individual consumer, producer and firm. Microeconomics is also known as the price theory. We know that in Microeconomics we study the behaviour of individual economic units such as the producer and the consumer. Through the study of such behaviour the main focus is the determination of prices commodities and factor prices in the market.
Microeconomics is the study of behaviour of individual units in the economy. For this purpose, the entire economy is sliced, i. In microeconomics each of the individual units is studied in isolation. It ignores the interdependence of economic variables. Thus, because of this assumption, it is said that microeconomics has a partial equilibrium approach. He is the founder of Microeconomics. It focuses on the aggregate measures such as aggregate demand, aggregate supply and aggregate price level.
Alfred Marshall in Marshall is known as the Father of Economics. On the other hand, Dr. Marshall is a neo-classical economist who developed the Principles of Economics. Accordingly, a firm being an individual unit, its behaviour is studied under microeconomics. Microeconomics studies prices of commodities and factors of production in both the consumer and factor markets.
It explains the distribution of resources among the competing groups in a manner that ensures their efficient usage; that is, there is minimum wastage of resources. In other words, it explains us how these scarce resources should be distributed so that they can be utilised to the fullest.
However, these assumptions may not always exist in reality and, consequently, make the validity of microeconomics doubtful.
Problems such as inflation relate to the behaviour of the all the economic units simultaneously in an economy. In this regard, it is beyond the scope of microeconomics. Define or Explain the following concepts. It analyses how consumers make their consumption choices and take decisions, given their incomes and prices of goods and services.
Similarly, it analyses how firms decide how much to produce by applying different input combinations. It also helps in determining prices, in both the commodity and factor markets, based on the demand and supply analysis. Thus, microeconomics is a study that basically focuses on the behaviour of individual economic units. That is, it is the equilibrium with regard to an individual unit assuming the effect of other units and variables constant.
It neglects the interdependence among variables. Thus, microeconomic analysis is regarded as partial equilibrium.
Economic efficiency involves attainment of efficiency along the following three aspects. Production efficiency: It refers to producing the maximum amount of output from the available resources. Consumption efficiency: It refers to distributing the produced goods and services among the various consumers in such a manner that the overall social welfare is maximised.
Overall economic efficiency: It refers to efficiency with regard to the production mix. In other words, it refers to producing that combination of goods and services that provide maximum satisfaction to the people.
The behaviour of individual economic units is studied under microeconomics. These resources may be natural resources, money, labour, etc. Resource allocation involves making decisions regarding how the resources should be allocated to each group such that they can be utilised in the best possible manner providing maximum gains to the society. The decision regarding resource allocation is particularly important because resources are scarce and also have competing uses.
Thus, effort must be made to use them efficiently and optimally. Give reasons or explain the following statements. The basic aim of such a study is to determine the prices in the commodities and factor markets. It is for this reason that microeconomics is also known as the price theory. The basic focus of such a study is the determination of prices in the factor and the commodities market.
In other words, it is based on the assumption of ceteris paribus. To put in simple words, it analyses each of the units is isolation while ignoring the interdependence among them. Such an analysis is known as partial equilibrium analysis.
These assumptions help in understanding the relationship between any two variables. However, these assumptions may or may not exist in the real world. This additional unit is called the marginal unit. All microeconomic decisions are based on this concept. Microeconomics refers to the study of individual economic units such as the consumer and the producer.
The following are the features of microeconomics. Price theory - Microeconomics is also called the price theory, as it helps in determining the prices of both the commodities and factors of production in their respective markets. Slicing method - Microeconomic analysis adopts the slicing method wherein, the entire economy is divided into various smaller units and then each unit is analysed individually in detail.
Partial equilibrium - Microeconomics uses a partial equilibrium approach. Herein, each of the units is studied in isolation assuming the effect of the other units as constant. It ignores the interdependence among the various units.
Microscopic approach - Just as a microscope enables us to see a larger view of smaller things, microeconomics shows a magnified view of an individual unit. It analyses small units in detail. It examines how these individual units perform economic activities and reach equilibrium. Microeconomics is the study of the following theories: i. Theory of product pricing - The theory of product pricing explains how the prices of goods are determined in the market.
For this, it is important to study demand and supply in the market. The demand is studied by studying the consumer behaviour and the supply is studied by studying the cost and production behaviour of the firm. Theory of factor pricing - The theory explains how the prices of various factors of production, namely, land, labour, capital and entrepreneur, are determined in the factor market in the form of rent, wages, interest and profits respectively. Theory of economic welfare - This theory of microeconomics deals with the allocation of resources.
It explains that resources should be used in a manner that gives maximum satisfaction to people. It involves making decisions such as what to produce, how much to produce, when to produce, for whom to produce and by what technique to produce.
History of microeconomics can be traced to classical economists. Adam Smith is regarded as the Father of Microeconomics. However, microeconomic analysis was done by Dr. Alfred Marshall, a neo-classical economist. He was the first person to use the principle of marginalism. Some of the other popular economists who have contributed to the development of microeconomics are Prof.
Pigou, J. Hicks, Prof. Samuelson, Mrs. Joan Robinson and Chamberlin. The following points highlight the importance of microeconomics: i. It helps us in understanding how free market economies work.
It explains how the prices are determined in both commodity and factor markets. It helps in making policies such as the tax policy, public expenditure policy and price policy.
It helps businessmen in making decisions about prices, cost of production, investment, etc. It helps in examining different aspects of international trade such as the effect of tariffs on the exchange rates and gains from international trade.
It helps in the development of certain models that are used for understanding and solving complex economic situations. Answer the following questions Explain the meaning of Micro Economics with the help of few important definitions. Microeconomics is the study of the issues pertaining to individual economic units, basically consumers and firms, which interact in the market of different goods and services.
It studies how consumers make their consumption choices and decisions, given their incomes and prices of goods and services. Similarly, it analyses how firms decide how much to produce by using different input combinations. The basic focus of this study is the determination of prices in the commodity markets and factor markets. The meaning of microeconomics can be better understood with the help of the following definitions.
According to Prof. Microeconomics deals with the study of the following theories: i. Theory of factor pricing - The theory explains how the prices of various factors of production, namely, land, labour, capital and entrepreneur are determined in the factor market, in the form of rent, wages, interest and profits, respectively. It helps in the development of certain models that help in understanding and solving complex economic situations.
These solutions for Introduction To Micro Economics are extremely popular among Class 12 Commerce students for Economics Introduction To Micro Economics Solutions come handy for quickly completing your homework and preparing for exams. Fill in the blanks with appropriate alternatives given in the brackets. Since then, these terms are used by economists all over the world. Microeconomics is the study of behaviour of individual units in an economy such as individual consumer, producer and firm. Microeconomics is also known as the price theory. We know that in Microeconomics we study the behaviour of individual economic units such as the producer and the consumer. Through the study of such behaviour the main focus is the determination of prices commodities and factor prices in the market.
Macroeconomics is the study of the performance, structure, behavior and decision-making of an economy as a whole. Macroeconomists focus on the national, regional, and global scales. For most macroeconomists, the purpose of this discipline is to maximize national income and provide national economic growth. While there are variations between the objectives of different national and international entities, most follow the ones detailed below:. Circulation in Macroeconomics : Macroeconomics studies the performance of national or global economies and the interaction of certain entities at the these level.
Publisher: OpenStax. Attribution CC BY. Principles of Economics is impressive and extremely comprehensive. It covers interesting and current topics that are suitable and relevant for any principles of Microeconomics and Macroeconomics courses at the lower undergraduate level. Comprehensiveness rating: 5 see less. The textbook is accurate, error-free, and unbiased.
David A. Dilts, Introduction to Microeconomics, E Fort Wayne: Macroeconomics - is concerned with the aggregate performance of the entire economic.
Macroeconomists study topics such as GDP , unemployment rates , national income , price indices , output , consumption , unemployment , inflation , saving , investment , energy , international trade , and international finance. Macroeconomics and microeconomics are the two most general fields in economics. Macroeconomics descended from the once divided fields of business cycle theory and monetary theory. It took many forms, including the version based on the work of Irving Fisher :. In the typical view of the quantity theory, money velocity V and the quantity of goods produced Q would be constant, so any increase in money supply M would lead to a direct increase in price level P.
Macroeconomics pp Cite as. Macroeconomics is the study of the behaviour of the whole economy.