MICROECONOMICS

Microeconomics

Microeconomics

Introduction

Economics is, according to one definition, the science that studies human behavior as a relationship between ends and scarce means that have alternative uses (Samuelson, 1948). The economics is, therefore, the science that studies the choices rational, committed by individuals and companies, to deploy resources scarce, they may have alternative uses, to produce various types of goods and services, as well as choices designed to distribute the latter between individuals and social groups to better meet the needs of individual and collective. This paper gives a brief introduction of economics. Moreover, the paper highlights the main branches of economics (i.e. Microeconomics and Macroeconomics) along with their differences. In addition to this the paper gives a real life example of each branch of economics.

Discussion

Economics has always been concerned with government economic policies. The first task is to understand how individuals will respond to policies; the second task is to decide if a policy is good or bad. The rationalist approach to the consumer is the dominant model for predicting responses to policies, but it can also form the basis of a normative framework to assess the impact of policies on a nation's welfare (Sen, 1987). The economic system can thus be defined as a system, composed in turn by a set of subsystems represented by various economic entities, aimed, through the behavior of the latter, the well-being of society in terms of meeting individual needs, the maximizing profits, optimizing resources and avoiding waste and to promote its continued development or evolution in terms of wealth , social progress , scientific and technological and the living conditions of the population means ( economic growth ), at least according to the vision of ' market economy in the modern world of Western society.

Macro Economics:

The term macroeconomics refers to study of the behavior of an economy as a whole or as a system; the phenomena explained are:

The short-run level of economic activity—the levels of national output, income, and employment;

The causes of short-run fluctuation in economic activity (business cycles), and

The long-run growth rate of an economy.

Macroeconomics as a distinct field within economics emerged in the late 1930s as a response to John Maynard Keynes's General Theory of Employment, Interest and Money (1936/1973, referred to subsequently as GT). Keynes contrasted his views on the causes of depressions and persistent involuntary unemployment with those of his predecessors, whom he termed the classical economists. The history of macroeconomics over the last 40 years can be interpreted as a struggle between competing visions of the economy and the proper macroeconomic roles of the state.

Microeconomics:

Microeconomics is the branch of economics that studies the behavior of individual economic agents, such as consumers (consumer theory), workers, investors (Theory of the firm), landowners, businesses: individuals or entities that play some role in the functioning of our economies. As the name then analyzes with a scientific approach (in particular referring to mathematical analysis) economic processes of micro-scale, contrary to Macroeconomics, which examines the phenomena on a global scale (Perloff, ...

Microeconomics

Microeconomics

Introduction

A branch of economics that studies how individuals, households, and firms choose to use scarce resources efficiently in order to satisfy diverse wants or minimize losses. Individuals, households, and firms are considered to be economic units. By focusing on individual units rather than aggregate units or variables, the methodology of microeconomics is distinct from that of macroeconomics.

Conclusion

Economics has evolved as an empirical social science, and several theories in microeconomics and macroeconomics are drawn from scientific analyses to inform decision making at all levels. As such, microeconomics is also dependent on actual occurrences that are closely linked to cause-effect relationships, collectively known as positive economics.

Fundamental laws in microeconomics involve the basis of demand and supply in relation to price, scarcity and choice, and the opportunity costs that are the corresponding results of choices made (Rosenthal, 2011). For example, the law of demand presupposes that under rational conditions, an increase in the price of a good will result in a reduction in the consumption of that good when real income falls, if other variables or factors do not instantaneously change (ceteris paribus). Similarly, an increase in wage rate will induce more workers to work, and an increase in the price of borrowing money (interest rate) will discourage investors or consumers from borrowing money.

Normative issues arise in microeconomics just as they emerge in macroeconomics. In microeconomics, they normally involve the ability of firms or industry to pay workers an efficient or decent wage, provide health coverage and old age benefits, and show restraint (social responsibility) in the use of environmental resources or provide compensation to society for the degradation caused (Rosenthal, 2011). Firms may also be expected to show interest in fulfilling societal goals by their largesse; in effect, there is a welfare component to microeconomics. At the macrolevel, a government might be expected to promote these welfare-enhancing policies through legislation, in order to influence the aggregate outcome.

Some economists argue that most decisions in microeconomics should be influenced by market conditions to obtain efficient outcomes. When expectations are realized, there is equilibrium in microeconomic markets, and when competition is promoted, microeconomic markets tend to be more efficient. Equilibriums do not last forever because markets are susceptible to shocks. Policy intervention can therefore ultimately influence the performance of microeconomic markets. For further reading, see Boyes and Melvin (2002), Case and Fair (2003), McConnell and Brue (2008), Salvatore (2002), and Schiller (2006).

Discussion

The economic variables of interest are usually prices, income or wages, employment, saving, and cost of production. Of course, these variables are important to the study of both microeconomics and macroeconomics and there might be a sense of overlap, but there are occasions when economists are interested in how individuals make a decision to work or to prefer leisure and on how hiring or production decisions are made. These micro decisions ultimately have an impact on the aggregate economy, and to that extent, they form an integral component of aggregate analysis, or the measurement of national economic ...

Why I decided to major in economics?

I'm not certain how much these will help you to fill out an application form, but here are the reasons why I chose to study Economics when I first entered university. Because I enjoy the topic. That's an absolute must to study economics. I wouldn't suggest anyone study economics if they do not enjoy at least some of the topics involved. Like anything in life, you get out of studying economics what you put in. Don't study economics because you think it's the route to a high paying job - you'll likely hate the program so much that you drop out (or fail) and if you do end up graduating, you might find you don't like the jobs your degree has made you qualified for.

That being said, I don't think it's a requirement that you love every aspect of the discipline. I quite enjoy microeconomics, industrial organization, and game theory. Econometrics? Not so much. As an undergraduate there were enough topics I liked that it helped me get through the ones I found difficult or did not really care for.

Because there are many opportunities for economics graduates. You are not guaranteed a good-paying job with an economics degree, but your chances are higher than in other programs. One of my interests as an undergraduate was philosophy, but I decided not to major in that because it seemed that the only possibility after completing my degree was law school - which did not appeal to me. With an economics degree you can work in a variety of different fields from finance and banking, public policy, sales and marketing, civil service (government departments, the Federal Reserve, etc.), insurance and actuarial work, etc. You can also go on to do further studies in economics, political science, business, or a variety of other fields. If you're certain your interest is in the business world, a business degree may be a better fit, but an economics degree does open a lot of doors.

Because you learn a lot of skills and knowledge that you can apply to other jobs or to your personal life. Learning about interest rates, exchange rates, economic indicators and equity markets can help you make better decisions about investing and obtaining mortgages. The statistical skills I gained I've used again and again, mostly in business settings. I also learned a fair bit about Microsoft Excel in my first two years in economics, which has aided me greatly.

Because economics teaches students how to understand and spot secondary effects and possible unintended consequences. This may seem relatively unimportant, but it's the most useful thing I've received from my economics training. Most economics problems have secondary effects - the deadweight loss from taxation is one such secondary effect. A government creates a tax to pay for some needed social program, but the secondary effect of that tax is that it changes people's behavior, causing economic growth to slow. By learning more about economics and working on hundreds of economics ...