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Economics And Macroeconomics

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In the simplest way, Economics is the studying of how money operates & how that capital is exchanged between consumer & the business. There are two main branches of economics. • Microeconomics • Macroeconomics Microeconomics Microeconomics is a branch of Economics which study how individuals or business firms allocate or manage scarce resources. Supply, demand, elasticity of price, quantity of demand & quantity of supply are some concepts of Microeconomics. Macroeconomics Macroeconomics flows on a wide area rather than microeconomics. It describes about the structure & the behavior of whole economy. It consists of larger concepts such as inflation of the country, unemployment, international trade & market, national demand etc. Study.com. 2018. What is Economics? - Definition & Principles - Video & Lesson Transcript | Study.com. [ONLINE] Available at: https://study.com/academy/lesson/what-is-economics-definition-principles-quiz.html. [Accessed 06 January 2018].There are key principles of the microeconomics which are as follows, 1. Supply, Demand & Equilibrium Demand is the quantity requirement over a product or a service on a specific price at a specific time period. The law of demand describes that Demand is more at lower prices than the higher prices while the other things being equal. …show more content…

In this essay, the author

  • Explains that economics is the study of how money operates and how that capital is exchanged between consumer & business. there are two branches of economics.
  • Explains that microeconomics is a branch of economics which study how individuals or business firms allocate or manage scarce resources.
  • Explains that there is a large number of buyers & sellers for each and every product or service. competition can be explained further as when firms have good amount of profit with higher supply another firm starts to catch the market.
  • Explains that elasticity is the response of a variable regarding to change in another variable. elasticity of demand describes the responsiveness of the quantity demanded against the price change.
  • Explains the term monopoly, where a single firm or an individual controls 25% or more of the specific market, and has less competition. that single seller or the firm is the controller and the price creator of that particular product or service.
  • Explains that market structure consists of different types of market systems, which are a result of capitalism. competition is the major regulator of the market system.
  • Explains that financial appraisal is done to find out whether the organization or the company is strong with the profit incomes and revenues to hold on to the co tenuous expenditure.
  • Explains that the key techniques used in financial appraisal in construction economics are net present value, benefit to cost ratio, internal rate of return, annual equivalent & discounted payback.
  • Explains that the npv is a good investment technique in financial appraisal as it adjusts for timing of project’s cash flow.
  • Explains that macroeconomics flows on a wide area rather than micro economics. it describes the structure & the behavior of whole economy.
  • Explains that the law of demand describes that demand is more at lower prices than higher prices while other things being equal. supply depends on factors such as number of suppliers, market demand for production, changes in technology, efficiency of labor involvement, government regulations.

Afterwards the findings are discounted and compared with the initial investment. A high ratio for the NPV is considered as a good result. With the higher ratios for NPV the company can be considered on investments and when lower the NPV is the same will be rejected. Because the company insufficiency to cover the expenditure or the cost occurring for the project. The NPV is a good investment technique in financial appraisal as it adjust for timing of project’s cash flow. With the value of NPV states that an investment should only take place when only having a positive NPV ratio which is a higher

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  • Economics: An Important Concept Of The Cardinal Utility Concepts
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    • Explains that in order to understand the cardinal utility concept, they will first try and understand utility, and further look into why in economics it plays such an important role.
    • Defines total utility as the total satisfaction obtained from the consumption of all possible units of a commodity.
    • Explains that marginal utility is the satisfaction gained from consuming another quantity of a good or service.
    • Describes the assumptions that go into the cardinal utility theorem before trying to understand it.
    • Opines that the law is not applicable in case of knowledge. reading of books provides more satisfaction and knowledge to the scholar.
    • Explains that the law is not applicable in case of indivisible goods. the consumer is unable to divide the goods to adjust units of utility derived from consumption.
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    • Opines that the law does not hold well in case fashion and customs. people like to spend money on birthdays, marriages and deaths.
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    • Explains that the consumer is bound to use commodity, which provides low utility due to non-availability of goods having high utility.
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    • Explains that there may be unlimited resources, but the does not work due to infinite resources. there is no need to change the direction of expenditure when there are gifts of nature.
    • Explains that every consumer wants to get maximum satisfaction out of his limited resources. he must substitute the thing of greater utility for one possessing less utility till marginal utilities are equalised.
    • Explains that businesses and manufacturers work towards the most economical combination of factors of production employed by hm. they will substitute one factor to another to maintain their marginal productivities.
    • Explains that in all our exchanges, this principle works, for exchange is nothing else but substitution of one thing for another.
    • Explains that it is assumed for cardinal utility theorem that all utilities are measurable and quantifiable, but in actual scenario, it can't be measured in such quantitative terms.
    • Explains that the utility for various goods is not dependant on each other. the utility derived from tea is greater than that of coffee.
    • Explains that marshall's demand theorem and constant marginal utility of money are incompatible except in a one commodity case.
    • Defines economics as a social science concerned with description and analysis of the production, distribution, and consumption of goods and services.
    • Explains that utility is an economic term referring to the total satisfaction received from consuming a good or service.
    • Explains how neo-classical economists developed the cardinal utility concept to measure the utility derived from a good. they gave the concept of ordinal utility of measuring utility.
    • Explains that neo-classical economists devised the concept of cardinal utility concept wherein all utility is considered cardinal or measurable, just any other mathematical or physical parameter.
    • Explains that utility is a cardinal concept, wherein one can express the utility of any good in terms of the amount of satisfaction he gains from it.
    • Explains the hypothesis of independent utilities, which implies that the total utility achieved by the consumer is the sum total of all the separate utilities of the goods.
    • Explains that while the cardinal utility of commodities diminishes as more good is purchased, the same doesn't hold true for the utility of money. the unit of measurement of money itself varies with amount.
    • Explains that introspection is the ability of the observer to reconstruct events which go on in the mind of another person with the help of self-observation.
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    • Opines that due to multiplicity of wants and scarcity, wants are competitive. we always tend to balance the marginal utility of the commodity and that of money.
    • Explains that every human wants to make the best use of his or her resources. the law of equi-marginal utility is also called the consumer's equilibrium.
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  • Freakonomics: The Correlation Between Economics And Incentives
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  • Economics Definition Of Economics
    explanatory essay
    Definition: Economics is the study of how individuals, firms, companies, and nations make choices on distributing scarce resources to satisfy as much of their wants as possible.

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    • Explains that land includes natural resources and are normally used as raw materials.
    • Explains that air, soil, and water are all considered as land, since they are not produced by humans and can be used in production of many different kinds of goods.
    • Explains that money does not count as capital in the production because money cannot be used directly to produce products.
    • Explains that businesses have to use buildings or machines to produce. buildings count as physical assets that will not depreciate a lot.
    • Explains that human capitals can transform raw materials into consumer used goods and provide services to businesses.
    • Explains that any worker counts as labor. farmers transform raw plants into rice or bread which can be directly consumed by consumers.
    • Explains that a measure of the values of what individuals own includes the amount of money and physical assets one has.
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    • Defines consumer goods as goods that consumers can directly buy and use. consumer goods are usually the end results of capital goods.
    • Explains that any food can be considered as consumer goods. consumers will purchase burgers and directly consume them.
    • Explains that needs are the things required for individuals to live. without needs, individuals may die.
    • Explains that wants are goods or services that are not required or necessary to maintain basic living, but what people desire in addition to the needs.
    • Explains that entertainment, luxury goods, cars are not required for basic living, but simply what people desire in addition to basic needs.
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    • Explains that the study of economics is important for understanding the limited amount of resources the earth can provide, so people can make better choices on answering the three basic economic questions.
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    • Describes the services that doctors provide in hospitals, and the education provided by teachers in schools.
    • Explains that scarcity refers to the limited nature of resources while human wants are unlimited.
    • Explains that petroleum is a non-renewable natural resource. if all petroleum are used up by humans, it will take an extremely long period of time for new petroleum to be formed.
    • Explains that shortages can be caused by government policies and natural disasters.
    • Explains that when the lands in a country used to grow wheat experience severe drought, the quantity of wheat produced for the country would drastically decrease.
    • Describes the factors of production that are used to produce certain products or services.
    • Explains that human resource is considered as labor. it will work for the factory and transform raw materials to consumer goods.
    • Explains that physical capitals are assets that individuals can use as a factor of production.
    • Explains that a building can be considered as physical capital. individuals can use the building to set up their company and produce products.
    • Defines human capital as knowledge, intelligence, talent, ability to perform labour (transforming raw materials into consumer goods) and produce economic value.
    • Explains that an individual who is very good at cooking can become the chief of a restaurant. their knowledge, intelligence, and ability to cook contribute to the business's production of food.
    • Defines a person taking the risk to organize and distribute resources in order to produce certain products and make profits or economic gains.
    • Illustrates how bill gates is a great example of an entrepreneur. he used his knowledge on computers and organized his resources to open up microsoft, which is an extremely successful company.
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  • What Is Managerial Economics?
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    According to McGutgan and Moyer: “Managerial economics is the application of economic theory and methodology to decision-making problems faced by both public and private institutions”. McNair and Meriam: “Managerial economics consists of the use of economic modes of thought to analyze business situations”. Spencer and Siegelman: Managerial economics is “the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management”. Haynes, Mote and Paul: “Managerial economics refers to those aspects of economics and its tools of analysis most relevant to the firm’s decision-making process”.

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    • Explains that managerial economics provides a logical and experiential framework for analyzing the question such as "what or how much should i produce, and for whom?", or "should i try to retail or whole sale?"
    • Explains that managerial decisions are an important component in achieving the objectives of the organization.
    • Explains that managerial economics encompasses all the problems and areas of management and a firm. decision-making, forecasting, demand analysis, capital management, and profit management are considered.
    • Explains that managerial economics is concerned with economic theory and tools of analysis, which are directly related in the process of decision-making.
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