ECONOMICS

Economics for business

Economics for business

Difference between microeconomics and macroeconomics

Macroeconomics studies the behavior of aggregate economic variables, i.e. variables that are formed with other variables. For example, the aggregate output of a country is formed with the production of all businesses, families, individuals and the public sector in this country. Other variables in the usual macroeconomic study are inflation and unemployment (Blanchard, 2000, pp. 20-40).

Microeconomics, however, studies the behavior of individual economic units, such as individuals, families, businesses and the markets in which they operate. For this reason it is also often defined as the science that studies the allocation of scarce resources among alternative ends. Microeconomic theory uses formal models that attempt to explain and predict, using simplifying assumptions, the behavior of consumers and producers. In general microeconomic analysis is associated with price theory and its derivations (Dass, 2002, pp. 1-9).

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Scarcity and opportunity cost

In economics the interrelationship between endless needs and limited availability of resources refers to the shortage. This is not an attribute of a particular good or resource, but it reflects a situation. For this reason, we see the way we manage our time and money.

The concept of scarcity in economics means that resources are still available in limited quantities. The absolute abundance does not exist to fulfill the needs of every individual. The opportunity cost of a choice is the value of the best option was rejected because of this choice. In a market economy, private property for sale in competitive markets, using inputs obtained in the competitive market, the direct costs are opportunity costs (Mahoney, n.d., pp 1-13).

Various applications:

• In Consumer Choice:

Opportunity cost of Y is Y = f (X).

It is the relative price of Y with respect to X.

The budget line is the border of consumption possibilities: above it is consumption inaccessible below the consumption feasible.

• At the discretion of the manufacturer:

Opportunity cost of a good X relative to Y is X = f (Y)

(= Opportunity cost of an additional unit of X)

Growth opportunity cost in production is because the factors of production are not fully and immediately adapted to all uses.

Production frontier

Production frontier is the efficient production (or efficient).Production will be efficient if the use of the same factors of production, it is not possible to increase the production of one good without decreasing that of the other.

A, XA cost in terms of Y = Ymax-YA.

• Opportunity Cost and choice of an economy as a whole:

All the resources and technologies available throughout the company are limited. Investment decisions of an economy determine a significant influence on its growth.

Alternative economics arrangements to overcome scarcity in society

The fundamental problem that arises any company subject to the economic use of their resources to apply to the satisfaction of needs in the context of scarcity, can be summarized in the following question: what goods to produce, how to produce, how to distribute? From the standpoint of economic organization there are only two conceptually different alternatives: economic system where private the individual or group on ...