27 Economics -- Basic Concept of Economics and Allocation of Resources

Why is micro economics called price theory?

1 Answers

Microeconomics is often called price theory to emphasize the important role that prices play in determining market outcomes. Microeconomics explains how the actions of all buyers and sellers determine prices and how prices influence the decisions and actions of individual buyers and sellers.

Macro economics is the study of aggregates. Give reasons.

Macroeconomics is the study of aggregates; as it studies the economy as a whole, rather than the individual economic units as a consumer or a producer.

Macro economics is also called income and employment theory. Why?

Macro-economics is also called the income and employment theory because it deals with determination of equilibrium level of income and the corresponding level of employment in the country.

Make a list of major economic problems arisen from scarcity of resources.

The four basic problems of an economy, which arise from the central problem of scarcity of resources are:

What to produce?

How to produce?

For whom to produce?

What provisions (if any) are to be made for economic growth?

What are the characteristics of Robbins‘ definition?

Major points of Lionel Robbins definition of Economics:

1 - Ends (Unlimited Wants)

2 - Means (Scarce Resource)

3 - Alternative Uses.

State Marshall‘s definition of economics.

Marshall's definition restricted economics as a subject to only analyze the material aspects of human welfare. Non-material aspects of welfare were ignored.

Why is micro economics called microscopic analysis or slicing method?

This is because it divides the economy in slices, parts or individual units for the purpose of in-depth study.

What are the uses of micro economics in business decision making?

Macroeconomics is used in business decision-making to help understand the economy as a whole and the effects of fiscal and monetary policies on individual businesses. By understanding this information, businesses can make more informed decisions about their own operations.

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