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Microeconomics and Macroeconomics

By jormarposgon Sep 18, 2014 966 Words
INTRODUCTION

Within the study of the fundamentals of economics must meet two basic concepts of economics these are Microeconomics and Macroeconomics and to get to know these concepts is necessary to know which is the economy and economics is the science that studies human behavior and trade , sales tax, receipt of wages, credit, is the science of the usual business of the above are some definitions that can be found in the economy as such. In this research we can differentiate macroeconomics microeconomics its relationship to the economy to serve both, we can also use them these two concepts indirectly or directly part of our daily lives daily spend, sometimes we invest, sometimes we produce etc .

Microeconomics and Macroeconomics

Macroeconomics is the branch of economics which deals with economic decision or behavior added of an economy as a whole; for example, the problem of inflation, unemployment, and the payment of a deficit. In short, the economy is studied as a whole. In contrast, Microeconomics is the branch of economics that studies the behavior of individual decision unit, as a single company, its relationship with the market, at what price to set a good, the quantity of a good should be produced, how a person uses their income to maximize satisfaction, and how the price of each product in the market is affected by the forces of supply and demand. For example, macroeconomics deals with GDP, inflation, interest rates, and unemployment. Microeconomics deals with the economics of health care or agriculture or work. For example, a macroeconomist would study the GDP figures, the Fed moves, the Dow Jones Industrial Average, or the Producer Price Index. A micro economist, on the other hand, you could try studying labor economics (ie unions, work shifts, etc.). Although "micro" means small and "macro" means large, the two should not be separated by the size of an economy or company. For example, Wal-Mart can be many times the size of the economy of a small country; However, the costs of Wal-Mart and the curves of supply / demand, shall be governed by microeconomic decisions, while the GDP of the economy and is a small aspect of the macroeconomy.

Microeconomics is the general study of individuals and business decisions; macroeconomics looks higher in the country and government decisions. Macroeconomics and microeconomics, and their wide range of underlying concepts have been a lot of writing.

Here is a brief summary of what each covers:
Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This also means taking in taxes and regulations created by the governments of the account. Microeconomics focuses on supply and demand and other forces that determine price levels observed in the economy. For example, microeconomics would look at how a specific company could maximize its production and capacity so it could lower prices and better compete in your industry.

Macroeconomics, by contrast, is the field of economics that studies the behavior of the economy as a whole and not only to specific companies, but entire industries and economies. This is seen in the economy-wide phenomena such as Gross Domestic Product (GDP) and how it is affected by changes in unemployment, national income, rate of growth and price levels. For example, macroeconomics would look at how an increase / decrease in net exports would affect the capital account of a nation or how GDP would be affected by the unemployment rate.

While these two studies of economics appear to be different, they are actually interdependent and complement each other, as there are many problems of overlap between the two fields. For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and, in turn affects the final product price charged to the public.

SHORTAGE

The basic economic problem which arises because people have unlimited wants but resources are limited. Because of scarcity, various economic decisions must be made to allocate resources efficiently. When we speak of scarcity in an economic context, it refers to limited resources, not a lack of wealth. These resources are the inputs of production: land, labor and capital. People have to make choices between different items because the resources necessary to meet their needs are limited. These decisions are made by giving up (trading off) you want to meet another.

EFFICIENCY

A broad term that implies an economic state in which all resources are optimally allocated to serve each person in the best way and minimize waste and inefficiency. When an economy is economically efficient, any changes made to help a person to harm another. In terms of production, goods are produced at the lowest cost possible, variables such as production inputs. Some terms that comprise the phases of economic efficiency include allocative efficiency, production efficiency and Pareto efficiency.

A state of economic efficiency is essentially just a theoretical one; a limit that can be approached but never reached. Instead, economists look at the amount of waste (or loss) between pure efficiency and reality to see how efficiently an economy is working. Measurement of economic efficiency is often subjective, based on assumptions about the social good created and how well it serves the consumers. Basic market forces, as the price level, employment rates and interest rates can be analyzed to determine the relative improvements made ​​to the economic efficiency of a point in time to another.

CONCLUSION

The conclusion is that microeconomics takes a bottom-up approach for analyzing the economy while macroeconomics has a top-down approach. In any case, both small and macroeconomics provide fundamental tools for any finance professional and should be studied together in order to fully understand how companies operate and earn income and, therefore, how an entire economy is managed and sustained .

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