Untitled Quiz

Study Notes

Terms "Micro" and "Macro" derived from Greek; "Mikros" means one millionth, and "Makros" refers to large.
Coined by Ragnar Frisch, a Norwegian scientist, in 1933.

Initial analysis of microeconomics traced back to classical economists like Adam Smith.
Neo-classical economist Sir Alfred Marshall popularized microeconomics through his work "Principles of Economics."
Influential figures in its development include Prof. Paul Samuelson and Prof. A.C. Pigou.

Macroeconomics concepts existed before microeconomics.
In the 16th to 17th century, mercantilists advised governments based on macroeconomic principles.
18th-century physiocrats analyzed national income and wealth.
Economists like Adam Smith and David Ricardo contributed to early macroeconomic theories.
Macroeconomics gained importance after the Great Depression, notably through John Maynard Keynes' "General Theory."

Theory of Product Pricing: Relates to market forces of supply and demand that determine prices.
Theory of Factor Pricing: Examines inputs like labor and capital to determine factor rewards such as wages and profits.
Theory of Economic Welfare: Involves the reallocation of resources for maximizing satisfaction and efficiency in production and consumption.

Concentrates on individual units like firms and industries while applying price theory to goods and services.
Utilizes partial equilibrium analysis, focusing on the balance between two economic units, isolating microeconomic effects.
Based on assumptions such as ceteris paribus, simplifying analyses.
Employs the slicing method by analyzing individual units and market demand separately.
Marginalism principle helps assess changes in total outcomes resulting from unit additions, influencing producer and consumer decisions.

Essential for determining prices of goods, services, and production factors within a free market economy.
Studies decision-making processes of consumers at the individual level, contributing to understanding market dynamics.