Economics and sociology

T. VARSHINI
17041AA106
SECTION -C
MICRO ECONOMICS:

● Microeconomics is the social science that studies the implications of incentives and decisions, specifically about
how those affect the utilization and distribution of resources. Microeconomics describes the pricing of
products and money, causes of different prices to different people, how can provide more or less benefit to
producers, consumers and others, and how individuals best coordinate and cooperate. Generally speaking,
microeconomics provides a more complete and detailed understanding than macroeconomics.
NOTE: MICRO ECONOMICS

● Microeconomics studies the decisions of individuals and firms to allocate resources of

production, exchange, and consumption.
● Microeconomics deals with prices and production in single markets and the interaction
between different markets but leaves the study of economy-wide aggregates to
macroeconomics.
● Microeconomists formulate mathematical models based on samples of behavior and test
the models against real-world observations.
EXAMPLE :

microeconomics deals with the economic problem at an individual and business levels: a resource
allocation problem.

Examples:

Consumer buying behaviour of mobile phones (i.e., what makes consumers prefer apple over
others).

Business decisions to introduce a new mobile phone (i.e., what resources will be required to
produce the product).

Business decisions about the cost of producing this mobile phone (i.e., what types of costs will be
incurred)

Business decisions about pricing a product (i.e., which market structure does the business face).
MACRO ECONOMICS: NEED

Macroeconomics is a branch of economics that studies how an overall economy—the market

systems that operate on a large scale—behaves. Macroeconomics studies economy-wide
phenomena such as inflation, price levels, rate of economic growth, national income, gross
domestic product (GDP), and changes in unemployment.

need:

It was earlier considered that concepts of microeconomics are sufficient enough to explain
economic behaviours. But then it was observed that economic aspects differed when applied to
two different scales. The concepts of microeconomics were not able to explain various
phenomenon taking place at the highest level of aggregation. In addition to this, there emerged
various paradoxes that microeconomics wasn’t able to explain.
NOTE: MACRO ECONOMICS

● Macroeconomics is the branch of economics that deals with the structure,

performance, behavior, and decision-making of the whole, or aggregate,
economy.
● The two main areas of macroeconomic research are long-term economic growth
and shorter-term business cycles.
● Macroeconomics in its modern form is often defined as starting with John
Maynard Keynes and his theories about market behavior and governmental
policies in the 1930s; several schools of thought have developed since.
● In contrast to macroeconomics, microeconomics is more focused on the
influences on and choices made by individual actors in the economy (people,
companies, industries, etc.).
EXAMPLE - MACROECONOMICS:
● Inflation rate
● Supply of money
● Aggregate demand
● Foreign exchange rate

● EU Economic Crisis. You have loads of information regarding the different gov't
policies that are being implemented such as austerity measures to help boost up the
economy
● The recent decision of the ECB to keep the rate of interest stable
- THANKYOU -