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Econ13a 1

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38 views1 page

Econ13a 1

Uploaded by

Zahid Ali Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Section 2 - Chapter 5 - 15

Ch # 5 – Micro and macro economics


Economy: an area where people and firms produce, trade and consume goods and services. This can vary in
size- from your local town to your country, or the globe itself.

Microeconomics and Macroeconomics

Microeconomics is the study of individual markets. For example: studying the effect of a price change
on the demand for a good. Microeconomic decision makers are producers and consumers (who
directly operate in markets)

Macroeconomics is the study of an entire economy, as a whole. Examples include studying the total
size of the economy or the unemployment rate, among other things. Macroeconomic decisions are
made by the government of the particular economy – a town, state or country)

KEY TERMS

Microeconomics: the study of the behaviour and decisions of households and firms, and the performance of individual
markets.
Macroeconomics: the study of the whole economy.
Market: an arrangement which brings buyers into contact with sellers.
Economic agents: those who undertake economic activities and make economic decisions.
Private sector: firms owned by shareholders and individuals

Summary

■ Microeconomics is concerned with what is happening in individual markets, whereas macroeconomics is concerned
with what is happening in the whole economy.
■ Decision makers are also known as economic agents. They are households, firms and government.

Four-part question

a Define microeconomics. (2)


b Explain whether decisions in microeconomics involve an opportunity cost. (4)

Economics Notes for IGCSE/O-LevelsName: ___________________________________ Date:_________________ Pg: 1

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