Study of Economics - Micro & Macro Economics
The report of economic science is divided past times the modern economists into 2 parts viz. Micro economics in addition to Macro economics. This partitioning is shown inwards the figure / nautical chart above. Micro economic science in addition to 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 in addition to 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, toll 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 in addition to particular commodities."
Subject Matter or Scope of Microeconomics
Micro Economics is concerned amongst the next topics :-
1. Commodity Pricing
Prices of private commodities are determined past times marketplace forces of demand in addition to supply. So micro economic science makes demand analysis (individual consumer behaviour) in addition to render analysis (individual producer behaviour).
2. Factor Pricing
Land, labour, majuscule in addition to entrepreneur, all factors contribute inwards production process. So they larn rewards inwards the shape of rent, wages, involvement in addition to lucre respectively. Micro economic science deals amongst determination of such rewards i.e. element prices. So micro economic science is too called every bit 'Price Theory' or 'Value Theory'.
3. Welfare Theory
Micro economic science deals amongst optimum resources allotment of available resources in addition to maximisation of social welfare. It provides answers for 'What to produce?', 'When to produce?', 'How to produce?' in addition to 'For whom it is to last produced?'. In short, Micro economic science guides for utilizing scarce resources of economic scheme to maximize world welfare.
Characteristics / Features of Microeconomics
Classical economists ever insisted on micro economic science because they believed that it is amend to empathize concept at private grade in addition to thus larn for full general (or macro) level. E.g. get-go agreement private consumer demeanour in addition to thus analyzing the demeanour of entire market.
1. Nature of Analysis
In micro economics, the demeanour of private consumers in addition to producers inwards particular is analysed. It is report of dependent acre affair from particular to general.
2. Method
Micro economic science divides the economic scheme into diverse pocket-size units in addition to every unit of measurement is analysed inwards detail. It is a slicing method.
3. Scope
Micro economical analysis involves production pricing, element pricing in addition to theory of welfare.
4. Application
Both theoretically in addition to practically, micro economic science is useful inwards formulating diverse policies, resources allocation, world 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 solely when 'other things beingness same'.
Uses / Importance / Advantages of Microeconomics
1. Individual Behaviour Analysis
Micro economic science studies demeanour 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 in addition to utilization of resources to hit diverse types of goods in addition to services.
3. Price Mechanization
Micro economic science decides prices of diverse goods in addition to services on the footing of 'Demand-Supply Analysis'.
4. Economic Policy
Micro economic science helps inwards formulating diverse economical policies in addition to 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 authorities inwards fixing the taxation charge per unit of measurement in addition to the type of taxation every bit good every bit the amount of taxation to last charged to the buyer in addition to the seller.
7. Foreign Trade
It helps inwards explaining in addition to fixing international merchandise in addition to tariff rules, causes of disequilibrium inwards BOP, effects of factors deciding telephone commutation rate, etc.
8. Social Welfare
It non solely analyse economical weather condition precisely too studies the social needs nether dissimilar marketplace weather condition similar monopoly, oligopoly, etc.
Disadvantages / Limitations of Microeconomics
1. Unrealistic Assumptions
Micro economic science is based on unrealistic assumptions, particularly inwards illustration of total job supposition which does non be practically. Even demeanour of 1 private tin laissez passer on the sack non last generalised every bit the demeanour of all.
2. Inadequate Data
Micro economic science is based on the information dealing amongst private behaviour, private customers. Hence, it is hard to larn 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, toll 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 in addition to was developed past times MD Alfred Marshall.
- Micro economic science mainly concentrates on commodity pricing, element pricing in addition to economical welfare.
- It is the 'Slicing Method' which divides the economic scheme into diverse pocket-size units in addition to every unit of measurement is analysed inwards detail.
- It indicates the partial equilibrium analysis.
- It is based on 'Ceteris Paribus' assumption.
