Define economics distinguish between micro economics and macro economics?

Answer 1

Economics is the science of decision making. It is the social science concerned with the allocation of limited (scarce) resources in the presence of unlimited potential uses for those resources. A resource is something that is consumed in the production of a good or service. Examples of resources include land, labor, capital, time, money, fuel, minerals, food, water, and endless others. Because resources are limited, the use of a resource dictates a trade-off with a different potential use for the same resource. This trade-off is a central concept of economics called opportunity cost.

Economics is used to determine the costs and benefits (consequences) of decisions to allocate resources. It is also used to study and predict peoples' actions based on the incentives that exist due to the expected consequences of actions. In practice, it usually deals with decisions or resources for which the value is quantified in terms of money. In some cases, the values are not easily quantified in monetary terms. Examples of difficult to quantify resources include public goods such as national defense and environmental quality. Other examples include personal resources such as leisure time and personality features.

An important distinction to make in discussing economics is the difference between positive and normative. Positive statements in economics reflect how things are. Normative statements in economics reflect opinions about how things should be. For instance, "Reducing output causes prices to rise," is a positive statement. In contrast, "We should reduce output to raise prices," is a normative statement.

Microeconomics deals with price and efficiency. Issues in microeconomics include the production, consumption, and trade of goods and services. Macroeconomics deals with the growth and stability of an aggregate economy. Issues in macroeconomics include government regulation, monetary policy, and fiscal policy.