Microeconomics and Macroeconomics
Definition:
Microeconomics: The study of the behavior of producers and consumers, as well as determining the quantity of inputs and goods/services to be traded based on market prices.
Macroeconomics: The study of the overall economy, including inflation, employment, economic growth, and balance of payments.
Goals:
Microeconomics: Create job opportunities, boost domestic production, maintain economic stability, balance payments, and equalize income distribution.
Macroeconomics: Analyze product/service prices and improve market failures to enhance competitiveness.
Scope:
Microeconomics: Determining economic activity levels, government policies, aggregate spending.
Macroeconomics: Interaction in goods and factor markets, behavior of sellers and consumers, utility theory, price elasticity, market structure, industry, and input markets.
Policies:
Microeconomics: Fiscal, monetary, and supply-side policies to manage income, government spending, and economic stability.
Macroeconomics: Minimum price and high price policies to address market imbalances.
Impact on Business:
1. Understanding the law of supply and demand.
2. The importance of market research when starting a business.
3. Managing economic cycles (ups and downs of economic activity).
4. Optimizing production costs and pricing decisions to attract consumers.
