Introduction — Economics STD 12 Commerce — Question

1.

Origin

The word micro comes from a Greek word 'Mikros' which means small.

The word macro comes from a Greek word 'Mackros' which means large.

2.

Definition

It is a branch of economics that studies the economic relationships or issues at an individual level like the households, the firms, the consumers etc.

It is a branch of economics that studies the economic relationships or issues of an economy as a whole.

3.

Objective

Its main objective is to analyse the principles, problems and policies for the achievement of the goal of optimum allocation of resources.

e the principles, problems and policies for the achievement of the goal of optimum allocation of resources. it investigates the principles, problems and policies relating to achievement of full employment and expansion of productive capacity.

4.

Deals with

It deals with how consumers or the producers make decisions depending on their given budget and other variables.

It deals with how different economic sectors like households, industries and other government and foreign sectors make their decisions.

5.

Method

The method of partial equilibrium (i.e. equilibrium in one market) is used.

The method of general equilibrium (i.e. equilibrium in all the markets, simultaneously) is used.

6.

Assumptions

It assumes that while studying micro economics, macro variables remains constant.

Study of macro economics assumes that micro variables remains constant.

7.

Variables

The major variables involved are price, consumer's demand, wages, rent, profit, firm's revenue, cost, etc.

The major variables involved are aggregate demand, aggregate supply, inflation, unemployment, poverty, etc.

8.

Significant role

In the context of micro economics 'market mechanism' plays an important role.

In the context of macro economics 'government' plays a significant role.

9.

Theories

Various theories studied are:

1. Theory of National Income.

2. Theory of Money.

3. Theory of General Price level.

4. Theory of Employment.

5. Theory of International trade.

10.

Popularized by

Alfred Marshal

Keynes