PART 1: INTRODUCTION

ACTIVITY 1. Define Microeconomics using the Pictures

Microeconomics is a branch of economics that deals the study of businesses and

individuals behavior in allocating limited resources. It is the study of how we make a decision by
buying/purchasing a particular product or services that we need. And how these decision affect
the demand and supply for goods and services which determine the price we pay. These prices
determine the quality of goods and supplied by businesses and the quality of goods demanded
by consumer.

ACTIVITY 2. Click the link provided and watch the video clip. Identify the importance of
Microeconomics and provide brief explanation.

MICROECONOMICS
IMPORTANCE
1. Working of a free market economy
Explanation: There is a gave and take relationship between the producer and the
consumer. Producer decide what to produce, how much to produce, and how to
produce product based on the preferences of the consumer.

2.Optimum Allocation of Resources

Explanation: It is a proper way of distributing and allocating of resources to
produce various goods and services that result to the maximum production without wasting
scarce resources.

3.Price Determination
 Explanation: Prices of goods and services is determined based on the demand of
the consumer.

4.Economic Policies and Planning

Explanation: Involves Pricing and Distribution to help economic welfare to take
investment decision.

5. Individual Economic Behaviors

Explanation: The study of individuals behavior on how, where, and when they
are going to use the resources.

6. International Trade
Explanation: Determine the exchange rate elasticity demand of exports and
import from international trade.

7. Public Finance
Explanation: Analyzing the effect of direct and indirect tax, public borrowing,
expenditure in economic system.

8.Basis Welfare of Economics

Explanation: Explain how maximum use of resources can be made to increase
the welfare of the society by removing inefficiency in production.

ACTIVITY 3. Click the link provided and watch the video clip. Compare Macroeconomics and
Microeconomics. Using the chart below. Provide brief explanation on how they affect each
other or explain their relation.
MACROECONOMICS

 Comes from a Greek words “macros” means big

 Big economy as a whole
 Big picture dimension of Economics by studying the gross domestic
product(GDP), Inflation rate and so on.

MICROECONOMIC

 Comes from a Greek words “micros” means small

 One consumer, household firm
 Dimension that complement the macroeconomics by studying the individuals
behavior.

RELATION BETWEEN MACROECONOMICS AND MICROECONOMICS

 Macroeconomics and Microeconomics are interrelated. How we got to

understand macroeconomics, we got to understand the microeconomics. For
instance a typical question we as in macro is why the interest rates go down.
Before you understand this question we need first to understand
microeconomics on how will a consumer respond to an interest drop. Once we
understand the behaviors of individual we can understand the economy as a
whole.