Study of Economics - Micro & Macro Economics
The report of economic science is divided past times the modern economists into 2 parts viz. Micro economics too Macro economics. This segmentation is shown inward the figure / nautical chart above. Micro economic science too Macro economics, both the terms were used inward 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. modest too 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 too 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 too supply. So micro economic science makes demand analysis (individual consumer behaviour) too furnish analysis (individual producer behaviour).
2. Factor Pricing
Land, labour, uppercase too entrepreneur, all factors contribute inward production process. So they instruct rewards inward the shape of rent, wages, involvement too lucre respectively. Micro economic science deals alongside determination of such rewards i.e. constituent prices. So micro economic science is every bit good called every bit 'Price Theory' or 'Value Theory'.
3. Welfare Theory
Micro economic science deals alongside optimum resources allotment of available resources too maximisation of social welfare. It provides answers for 'What to produce?', 'When to produce?', 'How to produce?' too 'For whom it is to locomote 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 meliorate to empathise concept at private degree too and therefore become for full general (or macro) level. E.g. source agreement private consumer conduct too and therefore analyzing the conduct of entire market.
1. Nature of Analysis
In micro economics, the conduct of private consumers too producers inward item is analysed. It is report of discipline affair from particular to general.
2. Method
Micro economic science divides the economic scheme into diverse modest units too every unit of measurement is analysed inward detail. It is a slicing method.
3. Scope
Micro economical analysis involves production pricing, constituent pricing too theory of welfare.
4. Application
Both theoretically too practically, micro economic science is useful inward formulating diverse policies, resources allocation, populace finance, international trade, etc.
5. Nature of Assumptions
Assumption of Ceteris Paribus is ever made inward every micro economical theory. It agency theory is applicable entirely when 'other things beingness same'.
Uses / Importance / Advantages of Microeconomics
1. Individual Behaviour Analysis
Micro economic science studies conduct of private consumer or producer inward a particular situation.
2. Resource Allocation
Resources are already scare i.e less inward quantity. Micro economic science helps inward proper resources allotment too utilization of resources to hit diverse types of goods too services.
3. Price Mechanization
Micro economic science decides prices of diverse goods too services on the footing of 'Demand-Supply Analysis'.
4. Economic Policy
Micro economic science helps inward formulating diverse economical policies too economical plans to promote all circular economical development.
5. Free Enterprise Economy
Micro economic science explicate operating of a costless enterprise economic scheme where private has liberty to accept his ain economical decisions.
6. Public Finance
It helps the regime inward fixing the taxation charge per unit of measurement too the type of taxation every bit good every bit the amount of taxation to locomote charged to the buyer too the seller.
7. Foreign Trade
It helps inward explaining too fixing international merchandise too tariff rules, causes of disequilibrium inward BOP, effects of factors deciding telephone substitution rate, etc.
8. Social Welfare
It non entirely analyse economical atmospheric condition precisely every bit good 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, particularly inward representative of total job supposition which does non be practically. Even conduct of i private tin non locomote generalised every bit 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 instruct 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) precisely 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 too was developed past times medico Alfred Marshall.
- Micro economic science mainly concentrates on commodity pricing, constituent pricing too economical welfare.
- It is the 'Slicing Method' which divides the economic scheme into diverse modest units too every unit of measurement is analysed inward detail.
- It indicates the partial equilibrium analysis.
- It is based on 'Ceteris Paribus' assumption.
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