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“ For Economics, wealth is not an end in itself, but it is only a means to an end; the end being the promotion of human welfare”.
“ Political economy or economics is the study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well being”
Managerial economics pertains to the overlapping area of economics along with the tools of decision sciences such as mathematical economics, statistics and econometrics as applied to business management problems.
“ Managerial economics is a science which studies the economic aspects of behaviour of the firm as an enterprise, and helps to allocate scarce resources to their alternative uses in such a manner as to optimize the firm’s ultimate objective, as an organization and a social institution, under conditions of the imperfect knowledge, risk and uncertainty. It provides principles, methods, and techniques of analysis of economic behaviour and at the same time prescribes ways and means to optimize economic efficiency”
Positive sciences simply describe while Normative sciences prescribe.
Managerial economics is a blending of pure or positive science with applied or normative science. It is positive when it is confined to statements about causes and effects and to functional relations of economic variables. It is normative when it involves norms and standards, mixing them with cause-effect analysis.
Broadly speaking, microeconomic analysis is individualistic, whereas macroeconomic analysis is aggregative. Microeconomics deals with the part (individual) units while macroeconomics deals with the whole (all units taken together) of the economy.
3. Difference in economic variables: Microeconomics is concerned with the behaviour of microvariables or microquantities.. Macroeconomics is concerned with the behaviour of macrovariables and macroquantities. In short, microeconomics deals with the individual incomes and output, whereas macroeconomics deals with the national income and national output.
4. Difference in field of interest: Microeconomics primarily deals with the problems of pricing and income distribution. Macroeconomics pertains to the problems of the size of national income, economic growth and general price level.
5. Difference in outlook and scope: The concept of ‘industry’ in microeconomics is an aggregate concept but it refers to all firms producing homogenous goods taken together. Macroeconomics uses aggregates which relate to the entire economy or to a large sector of the economy. Aggregate demand covers all market demands.
6. Demarcation in areas of study: Theories of value and economic welfare are major areas in microeconomics. Theories of Income and employment are core topics in macroeconomics.
THREE MAJOR FIELDS OF ECONOMICS Microeconomics Pricing Distribution Welfare (Theory of Value) (Factor Pricing) ( Welfare Economics) Theory Theory Theory General Theories of of of Theory of of Demand Production Pricing Distribution Rent Wages Interest Profit
Along with individual economic welfare , welfare economics is also concerned with social welfare, which is based on overall economic efficiency of the system. When maximum individual wants are satisfied at the best possible optimum level by a production pattern through efficient allocation of resources, overall economic efficiency or ‘Pareto optimality’ condition is reached. Such a situation can raise the standard of living of the population and maximize social welfare.