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Microeconomics 1 2 3 4 Basic concepts Demand and supply Consumer’s Behaviour Analysis Perfect and Imperfect Competition Macroeconomics 5 6 7 8 National income analysis Consumption, Saving and Investment Determination of National Income Monetary and Fiscal Policies Economic Systems 9 10 Capitalism, Socialism and Mixed Economic System Islamic Economic System 74 81 33 39 62 69 2 7 15 21
ECONOMICS: It is a social science (social science is a science, which studies any aspect of human life) which studies as to how the scarce resources, which have alternative uses should be allocated/utilized so that maximum goods are produced i.e., maximum wants are satisfied. Basic concept Goods/resources: Anything that provides satisfaction or utility is called goods/resources. Characteristics of resources: • They are scarce • They have alternative uses. Scarcity of resources When demand for a resource exceeds its existing supply that resource is said to be scarce. Note: scarcity and shortage are the two different things. Shortage is a temporary phenomenon i.e., when supply falls short of the demand temporarily. The problem of scarcity leads to 3 issues (I) What (II) How (III) for whom to produce. Alternative uses When a man can satisfy more that one want with the same resource or can produce more than one product from one resource then the resource is said to have alternative uses. Equilibrium: It is a state when the economy is making full use of resources or when maximum goods are produced. Opportunity cost: The cost of an item measured in term of the alternative forgone is called its opportunity cost. For instance, if government decides to produce more hospitals and fewer schools, the increase in the number of hospitals has an opportunity cost in terms of the number of school forgone. BRANCHES OF ECONOMICS: MICROECONOMICS AND MACROECONOMICS Micro and Macro are the two major subdivisions in the field of economics. Micro examines the economy in miniature, while macro concerns itself with economic aggregates, such as gross domestic product or national Income, unemployment rates etc. Microeconomics Microeconomics studies the economy in miniature, considering specific sectors or industries, and the interactions of households and firms within these markets. Features of Micro
The major areas of study in microeconomics include firms' optimal production, the impact of public policy on particular markets, and issues related to prices. Significance Because so much of microeconomics examines issues related to prices of goods and services, micro is sometimes referred to as price theory. Macroeconomics Macroeconomics takes a "big picture" approach to the economy, studying economy wide phenomena and issues affecting the economy as a whole. Features of Macro Major concepts in macroeconomics include unemployment, inflation, productivity, government budget and gross domestic product (GDP). Business Cycles Business cycles, a term for fluctuating periods of economic strength and weakness, are a major topic of study in macroeconomics. Microeconomics detail explanation: Microeconomics is a branch of economics which focuses on the market attitude of the individual customers and organizations which enables the business to understand the market behavior in micro perspective. Micro economics enables the business organizations to take decisions on the smaller and critical aspects; it also takes the factors affecting such decisions into consideration. Macroeconomics detail explanation: Macroeconomics is that branch of economics which studies the economics in a broader sense. Here the behavior of the economy is studied as a whole, such as Gross National Product (GDP) on an economy and how it is affected by changes in unemployment, national income, rate of growth, and price levels and how an increase/decrease in net exports would affect a nation's capital account or how GDP would be affected by unemployment rate....