[Commerce Class Notes] on Introduction to Macroeconomics Pdf for Exam

Economics is a vast subject that deals with human behaviour and sustainably aims in the distribution of resources. Consumers can increase the way profit and welfare of society by maximizing satisfaction. Microeconomics is a part of this extensive subject which reads this way of human behaviour. 

Students need to understand the basic concepts of microeconomics to differentiate between the factors affecting it. This section speaks about the way microeconomics is related to a nation’s economy in a broadway.

The Introduction to Microeconomics and its Fundamentals

The economic theory is applied to distinguish between real-life situations which are done following two concepts Macroeconomics and Microeconomics.

Here macro means large or big, which deals with the larger picture or a country. Macroeconomics is related to the economy and its problems like inflation, poverty, and other issues. It studies the aggregates and effect on the economy incomplete, which is total changes of process.

Microeconomics is related to the smaller region as it focuses on building smaller blocks of an economy. It deals with an individual unit like the demand for a product in a market. This concept is applied to a smaller level of the economy for a smooth flow of cash.

A good example will be a supply of products, the cost of an item, etc. These processes govern the microeconomics concepts and their function. Demand and supply are two essential factors that affect these two factors.

Basic Microeconomics Issues in an Economy

Every country’s economy faces problems relating to the scarcity of resources, which results in issues of the economy. A country’s economy has to decide the even distribution of limited resources. The problems that are usually seen in an economy are mentioned below.

What to Produce?

As resources are limited, the economy has to decide the alternative to deal with the issue. It decides on the process of distribution and allocation of resources. An economy plans on allocating resources towards the demand and thereby sacrifices other wants. There is always an option or alternative to deal with this concern. Here the ultimate goal is the maximum satisfaction of human beings.

It is essential to know that when one item is reduced than other goods increase. After deciding what to produce, and the economy has to choose the quantity to be made.

How to Produce?

An individual can employ various technologies to produce goods and services without errors. This includes choosing inputs in a combination of information. Ideally, two techniques can be implemented 

Labour intensive technique – In this process, an individual uses more labour and limited capital.

Capital intensive technique – This manufacturing technique uses more capital and limited labour.

These techniques are used by the economy for manufacturing and are based on abundant input. It also implies more human power and labour imposed techniques. If more capital is provided, then the capital intensive approach can also be used in Microeconomics.

For Whom to Produce?

In this issue, an economy has to choose the masses for whom the goods and services have to be produced. Here the distribution of profits is the primary concern.

There are several factors and issues related to types of microeconomics. A student can gain information on these topics by referencing quality study materials. One can check educational sites like that offers solutions and exercises for an assortment of services.

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