Economics Basics Macro and Microeconomics
Introduction
What Is Economics
Scarcity
Macro and Microeconomics

Production Possibility Frontier (PPF)
Opportunity Cost
Specialization and Comparative Advantage
Absolute Advantage
Demand and Supply
The Law of Demand
The Law of Supply
Time and Supply
Supply and Demand Relationship
Equilibrium
Disequilibrium
F. Shifts vs. Movement
Elasticity
The availability of substitutes
Income available to spend on the good
Time
Income Elasticity of Demand
Utility
Monopolies
Oligopolies
Perfect Competition
Conclusion

 

 

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Macro and microeconomics are the two vantage points from which the economy

is observed. Macroeconomics looks at the total output of a nation and the way the nation allocates its limited resources of land, labor and capital in an attempt

to maximize production levels and promote trade and growth for future

generations. After observing the society as a whole, Adam Smith noted that there was an "invisible hand" turning the wheels of the economy: a market force that keeps the economy functioning.

 

Microeconomics looks into similar issues, but on the level of the individual people and firms within the economy. It tends to be more scientific in its approach, and studies the parts that make up the whole economy. Analyzing certain aspects of human behavior, microeconomics shows us how individuals and firms respond to changes in price and why they demand what they do at particular price levels.

 

Micro and macroeconomics are intertwined; as economists gain understanding of certain phenomena, they can help nations and individuals make more informed decisions when allocating resources. The systems by which nations allocate their resources can be placed on a spectrum where the command economy is on the

one end and the market economy is on the other. The market economy advocates forces within a competitive market, which constitute the "invisible

hand", to determine how resources should be allocated. The command economic system relies on the government to decide how the country's resources would

best be allocated. In both systems, however, scarcity and unlimited wants force governments and individuals to decide how best to manage resources and allocate them in the most efficient way possible. Nevertheless, there are always limits to what the economy and government can do.

 

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