Micro-economics
Notes
Part - 1
, Introduction to Economics:
Economics is a branch of science that studies how goods and services are produced, distributed and consumed. It
focuses on the decision-making processes of individuals, businesses, and governments as they allocate their
resources to meet their wants and needs. Economics covers aspects ranging from microeconomics, which analyzes
firm-level choices, to macroeconomics, which examines the broader performance of national or global economies.
Definition of Economics:
Economics can be defined in ways that reflect perspectives within the field. Here are some accepted
definitions;
1. Deficiency definition; Economics is often defined as the study of how societies manage their resources to
satisfy unlimited wants. This definition emphasizes the concept of scarcity, where resources such as time,
money, labor and natural resources are limited while human wants and needs are virtually unlimited.
2. Lionel Robbins Appreciation; Economist Lionel Robbins defines economics as "the study of behavior
considered in relation to extraordinary resources that have alternative uses." This definition highlights the
choices individuals make to pursue their goals given the limitations of resources.
3. Alfred Marshalls definition; Alfred Marshall, a famous economist, defined economics as "the study of
people, in their activities; it analyzes those actions that are most closely related to the acquisition and use of
material well-being." This definition focuses on aspects of decision making.
Mode of Definition:
Economics can be defined in two main ways:
1. Positive economics: This type of definition is objective and descriptive. It seeks to explain and predict
economic phenomena based on observable facts and data. Positive economics focuses on "what is."
2. Normative economics: Normative definitions are more subjective and value-based. These include deciding
what "should" happen in the economy. These decisions may be influenced by moral, political, or ideological
considerations.
Branches of Economics:
Economics is a broad field with various sub-disciplines, each focusing on specific aspects of economic activity.
Some of the major branches of economics include:
1. Microeconomics: This branch examines the economic behavior of individual agents, such as consumers,
firms, and markets. It deals with topics such as supply and demand, pricing, consumer choice, and market
structure.
2. Macroeconomics: Macroeconomics looks at the economy as a whole, studying aggregate variables such as
GDP (Gross Domestic Product), inflation, unemployment, and government policies that affect the overall
performance of the economy.
3. International Economics: This branch analyzes economic interactions between countries including
international trade, exchange rates and global financial markets.
4. Development Economics: Development economics focuses on issues related to the economic development
of countries, including poverty, inequality, and policies to promote economic growth in developing countries.
Notes
Part - 1
, Introduction to Economics:
Economics is a branch of science that studies how goods and services are produced, distributed and consumed. It
focuses on the decision-making processes of individuals, businesses, and governments as they allocate their
resources to meet their wants and needs. Economics covers aspects ranging from microeconomics, which analyzes
firm-level choices, to macroeconomics, which examines the broader performance of national or global economies.
Definition of Economics:
Economics can be defined in ways that reflect perspectives within the field. Here are some accepted
definitions;
1. Deficiency definition; Economics is often defined as the study of how societies manage their resources to
satisfy unlimited wants. This definition emphasizes the concept of scarcity, where resources such as time,
money, labor and natural resources are limited while human wants and needs are virtually unlimited.
2. Lionel Robbins Appreciation; Economist Lionel Robbins defines economics as "the study of behavior
considered in relation to extraordinary resources that have alternative uses." This definition highlights the
choices individuals make to pursue their goals given the limitations of resources.
3. Alfred Marshalls definition; Alfred Marshall, a famous economist, defined economics as "the study of
people, in their activities; it analyzes those actions that are most closely related to the acquisition and use of
material well-being." This definition focuses on aspects of decision making.
Mode of Definition:
Economics can be defined in two main ways:
1. Positive economics: This type of definition is objective and descriptive. It seeks to explain and predict
economic phenomena based on observable facts and data. Positive economics focuses on "what is."
2. Normative economics: Normative definitions are more subjective and value-based. These include deciding
what "should" happen in the economy. These decisions may be influenced by moral, political, or ideological
considerations.
Branches of Economics:
Economics is a broad field with various sub-disciplines, each focusing on specific aspects of economic activity.
Some of the major branches of economics include:
1. Microeconomics: This branch examines the economic behavior of individual agents, such as consumers,
firms, and markets. It deals with topics such as supply and demand, pricing, consumer choice, and market
structure.
2. Macroeconomics: Macroeconomics looks at the economy as a whole, studying aggregate variables such as
GDP (Gross Domestic Product), inflation, unemployment, and government policies that affect the overall
performance of the economy.
3. International Economics: This branch analyzes economic interactions between countries including
international trade, exchange rates and global financial markets.
4. Development Economics: Development economics focuses on issues related to the economic development
of countries, including poverty, inequality, and policies to promote economic growth in developing countries.
