EconomicsChapter 1

Introduction to micro economics

Introduction to economics
Adam smith first gave the definition of economics He is known as father of economics Widely accepted definition of economics is given by Prof. Lionel Robbins It states that economics is a science which studies human behaviour as a relationship between ends (wants) & scare (resources) which have alternative uses

 Economics consists of micro & macro economics Micro is the study of particular firms, particular household, individual prices, wages, income, individual industries & particular commodities

Features of the Micro Economics

1. Microscopic study-splits economy into small individual units & analyses the behavior of every unit in detail 2. Study of individual units-studies particular firm, industries, commodities, etc. Thus it studies only the part of economy n not the whole 3. Core of micro economics is price theory 4. Relates to partial equilibrium analysis-studies a small part of the economy

5. Other name for micro economics is marginal analysis- study the variable through the effects of minor changes. Eg: wht will happen to satisfaction if consumer increase or decrease consumption by small level 6. Economizing: maximum satisfaction by efficiently using the limited resources 7. Construction of models: expression of complicated phenomenon in simplified version eg( graph, chart, diagram, statistical tables) 8. Operates on slicing method

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