Economics: Concepts and Theories in Micro and Macroeconomics

Economics

Table of Contents
Economics........................................................................................................................................1
REFERENCES................................................................................................................................6

Economics
Economics is the branch of social study which mainly concerned with production,
consumption as well as transfer of wealth (Gregory Mankiw, 2019). It helps in studying the
current affairs by critically analysing market condition, including ways to improve economic
performance. Reflecting on this subject, a critical evaluation is done on some essential concepts
and theories in micro and macroeconomics, under present report. It includes demand and supply
theory that apply while making market related decisions, with impact of different market
structures on pricing products and services.
Economics is study to understand how to utilise the limited resources efficiently, for the
purpose of earning maximum possible satisfaction. Through market survey, it can be analysed
what types of products and services are produced for satisfying the needs of consumers. For this
purpose, main factors of production are concerned with factors like land, labour, capital as well
as entrepreneurship (Bhattacharyya, 2019). To understand influence of such factors on economic
performance, two main concepts are being studied most. It includes micro and macroeconomics
which appear to be different but interdependent on theories of each other. Microeconomics is
that branch of economy that concerned only with specific units and focused on utility,
profitability and area where a firm operates individually (Tang and et. al., 2018). While
macroeconomics focused on households, industries, government and more, to study economy as
a whole. Therefore, it is used for identifying the broad issues like growth of country in terms of
GDP (Gross Domestic Product), unemployment, trade balance and inflation. Instead of studying
the aspects of profitability of companies at individual level, macroeconomics analyses whole
industries, for ascertaining rate of inflation and process to stimulate the economic growth. It
helps in evaluating how GDP or economic growth can be affected by unemployment rate and
trade policies (Mankiw, 2020). To identify and measures such ratio, macroeconomic policies like
monetary and fiscal are studied. The term monetary policy involves those policies which affect
interest rates, bank lending, financial capital markets and more. While another term i.e. fiscal
policy involves the government taxes and spending.
Considering the concept of microeconomics, it helps in examining the way a company
maximise its production and business capacity to offer products on lower prices, as well as give
better competition to other rivalries in same industry (Bhattacharyya, 2019). Therefore, to
examine the same, several key principles are undertaken while studying microeconomics. It
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