Microeconomics and Macroeconomics: Introduction — Flashcards

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Economics is concerned with the study of individual and social choice in situations of scarcity. It studies how scarce resources are used at the individual level and at the level of the whole economy.

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Scarcity means lack of availabilities. It refers to a situation when resources are not enough to satisfy all the wants of the people. This makes choice necessary in every economy.

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Resources are those goods and services which are used to produce other goods and services. They are classified into land, labour, capital, and entrepreneurship, and are also called factors of producti…

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An economy refers to economic activities of a specific area or region. It includes the production, exchange, and use of goods and services in that area.

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Microeconomics studies the economic behaviour of the individual unit, such as a person, a household, or a firm. It deals with small parts of the economy and focuses on individual units rather than all…

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Microeconomics is called Price Theory because it is mainly concerned with the determination of prices of individual commodities and factors of production. It explains how relative prices are determine…

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The three characteristics of microeconomics are: study of individual units, study of microeconomic variables, and study of price determination. It focuses on one consumer, one firm, or one industry at…

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Microeconomics is based on the assumption of full employment. Because of this, it mainly focuses on the allocation of resources and the determination of prices.