Introduction to economics

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INTRODUCTION TO ECONOMICS





Economics is a social  science which studies the way the society chooses to use its limited resources to produce goods and services and disturb them among people. It is a science that analyses the choice making economic behavior.
Is the analysis limited to the behavior of an individual or is it extended to the country as a whole? Economics studies both. It analyses the behavior of an individual under the branch of economics called ''microeconomics'' The behavior of the society as a whole is analysed under the branch ''macroeconomics''.


       MICROECONOMICS AND MACROECONOMICS

Study of economics is traditionally divided into microeconomics and macroeconomics. The terms ''micro'' and ''macro'' come from the Greek words meaning ''small'' and ''large''.

MICROECONOMICS

 Microeconomics studies the behavior of individual economic units, or parts, that make up economic system. These individual economic units are individual firms, households and industries. It is concerned with how individual units make decisions, i.e. make choices. It also studies how these individual units interact. The studies like relation between price and supply of a good, price determination, are all examples of microeconomics studies.

MACROECONOMICS

Macroeconomics studies the behavior of the economy as a whole. It studies national aggregate demand and aggregate supply. It also studies national economic problems like inflation, unemployment, poverty, and the issues connected with economic growth and economic development. 

RELATION BETWEEN MICROECONOMICS AND MACROECONOMICS 

Both microeconomics and microeconomics are simply two ways of looking at the same thing. It is because the behavior of the economy as a whole is dependent on the behavior of the units that make it up. For example, aggregate demand of the economy is the sum total of demand of all individual units that make the economy. Similarly, national income is the sum total of income of all the residents of the economy. An economist has beautifully summed up the intimate relation between the two with this expression: Microeconomics sees and examines the ''trees'', while macroeconomics sees and analyses the ''forests''.




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