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Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. The macroeconomic perspective looks at the economy as a whole, focusing on goals like growth in the standard of living, unemployment, and inflation. Macroeconomics has two types of policies for pursuing


Microeconomics is a branch of economics that studies the behavior of individual economic agents, or systems with a limited number of agents, in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. The microeconomic perspective focuses on parts of the economy: individuals, firms, and industries. Together with macroeconomics, which studies systems


Employment is a relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for-profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee. Human labor is one of the most important resources which need effective utilization – “almost”


Scarcity means that human wants for goods, services, and resources exceed the available supply (the opposite of scarcity is abundance). Scarcity also includes an individual’s lack of resources to buy commodities. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply.


In economics, a commodity is a basic good or service that is interchangeable with other goods of the same type. A commodity must be easily storable over time, that is, not lose its original characteristics. The high standardization that characterizes a commodity allows it to be easily negotiated on international markets.

Budget constraint

In economics, a budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. There are two major differences between a budget constraint and a production possibilities frontier. The first is the fact that the budget constraint is a straight line. This is because


In economics, demand is an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service during a given period of time. In economics, the law of demand states that the quantity demanded and the price of a good or service is inversely related,


Inflation is a general and ongoing rise in the level of prices in an entire economy. Inflation does not refer to a change in relative prices. A relative price change occurs when you see that the price of tuition has risen, but the price of laptops has fallen. Inflation, on the other hand, means that there

Production possibilities frontier (PPF)

A production possibilities frontier (or production possibility curve, PPC) defines the set of choices society faces for the combinations of goods and services it can produce given the resources available. The shape of the PPF is typically curved outward, rather than straight. Choices outside the PPF are unattainable and choices inside the PPF are wasteful. Over time, a growing

Technical efficiency (X-inefficiency)

When we talk of efficiency in terms of the productiveness with which we obtain an output with a certain set of inputs, we are talking about technical efficiency. An alternative way of looking at it is through X-efficiency – the level of efficiency in the case of imperfect competition. For instance, a monopolist might not upgrade

Allocative efficiency

The paradigm of allocative efficiency assumes that producers are only supplying goods that the market wants, i.e. products that are in high demand. In mathematical terms, it is the point at which price is equal to the marginal cost (the cost of producing one more unit of particular produce). Some allocations are inherently better than others in


Industrial organization.


Production theory is one of the basic concepts of microeconomics; it is the study of production or the economic process of converting inputs into outputs. Producers seek to choose the combination of inputs and methods of combining them that will minimize cost in order to maximize their profits. The production uses resources to create a good

Consumer choice

The theory of consumer choice (or consumer demand theory) is the branch of microeconomics that relates preferences for the consumption of both goods and services to the consumption expenditures; ultimately, this relationship between preferences and consumption expenditures is used to relate preferences to consumer demand curves. Analogous to production theory, consumers will choose to purchase and consume a


Economics is the social science that studies how humans make decisions in the face of scarcity, the production, distribution, and consumption of goods and services. These can be individual decisions, family decisions, business decisions, or societal decisions. Economists analyze problems differently than do other disciplinary experts. The main tools economists use are economic theories or models.


Banks facilitate using the money for transactions in the economy because people and firms can use bank accounts when selling or buying goods and services, when paying a worker or receiving payment, and when saving money or receiving a loan. In the financial capital market, banks are financial intermediaries; that is, they operate between savers who


Insurance is a way of sharing risk. People in a group pay premiums for insurance against some unpleasant event, and those in the group who actually experience the unpleasant event then receive some compensation. The fundamental law of insurance is that what the average person pays in overtime cannot be less than what the average person


The cost, in the economy, business management, and accounting, indicates the expression in money or other numerical value of the goods and services used for the production or purchase of a good or service. It can be determined on the basis of internal assessments of the economic entity that holds it or in economic transactions with