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Micro economics : Microeconomics is the study of the small part or component of the whole economy that we are analyzing. For example we may be studying an individual firm or in any particular industry. In Microeconomics we study the price of a particular product or particular factor of the production.
The Micro Economics theory studies the behavior of individual decision-making units such as consumers, business owners and business firms.
Macro economics is the study of behavior of the economy as a whole. It examines the overall level of nations out put, employment, price and foreign trade.
Macroeconomics is concerned with aggregate and average of entire economy.
e.g. In Macro economics we study about forest not about tree.
In other words in macro economics study how these aggregates and averages of economy as whole are determined and what causes fluctuation in them. For making of useful economic policies for the nation macroeconomics is necessary.
Macro economics involves choice among alternative central objectives.
A nation can’t always have high consumption and rapid growth.
High inflation rate has either a period of high unemployment and low output, or interference with free markets through wage-price policies. These difficult choices are among those that must be faced by macroeconomic policy makers in any nation.
Market demand – consists of the sum of all individual demand schedules in the market
Represented by a demand curve
At higher prices, consumers generally willing to purchase less than at lower prices
Demand curve – negative slope, downward sloping from left to right
Demand Curve Demand 100 150 Rs.50 Rs.100 Price Quantity The demand curve slopes downwards from left to right (a negative slope) indicating an inverse relationship between price and the quantity demanded. Demand will be higher at lower prices than at higher prices. As price falls, demand rises. As price rises, demand falls.
Perfectly elastic demand (At a given price or less than the given price, infinite qty will be bought)
Perfectly inelastic demand ( Same qty will be bought at any price)
Demand with unity elasticity (Equally proportionate demand for proportionate change )
Relatively elastic demand ( More than proportionate demand due to price change)
Relatively inelastic demand (less than proportionate demand due to price change )
steep Less than one Relatively inelastic Flat More than one Relatively elastic Rectangular hyperbola One unity elasticity Vertical Zero Perfectly inelastic Horizontal Infinite Perfectly elastic Curve shape Description Type
Results of Delphi questionnaires are often later found to have predicted the real course of events remarkably badly.
Wrong guesses are often made by renowned specialists and sometimes even by a majority of them, and the odd person who is later found to have predicted right would perhaps never have been elected to the Delphi group of experts
The cost of the labour that does not alter the construction, composition, conformation, or the condition of the direct material but is necessary for the progressive movement and handling of the product to the point of dispatch.
This cost is absorbed by the cost centers and cost units.
Eg. Maintenance men, helpers, machine setters, supervisors, foremen etc.
Factory cost: Prime cost + production overhead where production overhead=Plant depreciation: 5,000 + Wages of indirect workers:10,000+ Factory building rent: 5,000+ Electricity: 1000 + Plant repair and maintenance: 3,000