Comparing Macro-Economics And Micro Economics

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Economic is about how all the goods and services that we want to buy are produced and how we earn the income to pay for them. It also studies how the production and employment system can go wrong and what can be done to fix it. In particular economic highlights specific areas in which the economy can go wrong and policies that can be followed by government in order to make improvement to the outcomes. The discipline is divided into two sections that are micro-economics and macro-economics. According to American Economic Review (1997), Micro-economics comes from the Greek word mikros, meaning “small” and is concerned with the behavior of an individual actor on the economic scene- households, business firms and government. It is further divided into two concepts that are demand and supply.
Demand is the willingness and ability of a buyer to acquire certain quantities of commodities for various possible prices that the buyer can reasonably offer. The law of Demand shows that the relation between price and quantity demanded is inverse that is, higher the price lowers the demand and vice-versa. Supply on the other hand, is the quantity of the product which the producer is willing to produce and
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It not only helps the business in making plans for their production but also in taking trade decisions. It also helps a business man the idea to increase or decrease the price of a commodity in order to earn maximum profit. According to Maharjan (n.d), earning profit or increasing revenue has always been the main perspective of any business firms and they increase prices of their product in order to earn maximum profit for his firm. Before taking any further step, what they should know is that demand and price has inverse relation, which is demand falls when the price increases. Thus, they must increase price of their commodity to such a level where their desired profit is still

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