![]() It is the role of microeconomics to study the different aspects of the market and establish the relevant prices. This will distort the point of equilibrium in the market. The reason for this observation is that supplies are motivated by high prices to produce more while consumers shy away fro buying expensive commodities. If the price of a product is increased through taxes, quantity demanded would reduce while quantity supplied would increase. Example of each observable factĪn example of microeconomic dimension is the pricing strategy which affects demand and ultimately supply of a product to the market (Colander, 2008). Fiscal policies and monetary are instrument commonly used as a strategy to maintaining stability and continue with economic development and growth. In trying to avoid depression in an economy, policies are formulated to assist in stabilizing the government. National governments use macroeconomic models to develop economic policy and strategies for the business (Blanchard, 2000). While recognizing that microeconomics is a wide area of study, some of its special characteristic can be highlighted as: effort to understand the causes and effects of short run changes in national income and an effort to synthesize determinants of economic growth in the long run period of time. Economist who have studied macroeconomics have developed models to explain the working relationship between national income, output, consumption, savings, investments, balance of payment and international finance (Blanchard, 2000). Macroeconomics examines aggregates in the system such as gross domestic product, unemployment rates and price levels so as to gain insight into the working of an economy. Macroeconomics emphasizes on the bigger picture of the economy thus acquitting on how things in the world in terms of the structure, performance, behavior and decision making process of the whole economy. It is also in microeconomics that a market failure like monopoly is speculated. If more tax is charged on market goods, then demand decreases. ![]() ![]() Some economic policies like change of taxes affect microeconomics of a country. Microeconomics revolves round production, consumption, and sale of goods and services (Colander, 2008). We can note therefore that microeconomics deals with the aspects of prices and its efficiency in a market environment where decisions are made. Such decisions also have an influence on the prices of products and ultimately the demand and supply. The decisions made in the market regarding the purchase of specific goods and services affects directly or indirectly supply and demand chain. Microeconomics can be defined as economics that examines how persons allocate the minimum resource among the households and firms (Bade, 2001). ![]() Difference between microeconomics and macroeconomics Microeconomics Furthermore, macroeconomic event with its impact will be specified in the deliberation. It will be fair to illustrate microeconomic decisions and factors that contributed to such a decision. ![]()
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