Presented To:

Mr. Rasheed
Presented By:
Muhammad Haroon
Farman Ali
Muhammad Haroon
M B A 2nd

Roll No:10607
Definition of Economics:

Economics is a science which studies

human behaviour as a relation between
unlimited desires and limited means
(resources) which have alternative uses.
Classification of Economics
 Micro Economics
 Macro Economics

Economics

Micro Macro
Micro Economics

Definition:
Microeconomics is a branch of economics that
studies how individuals, households and firms and
some states make decisions to allocate limited
resources, typically in markets where goods or
services are being ...
 Micro economics has been divided into four parts
1 production:
Meaning of production of wealth.
Cost of production & how it is minimize.

Analysis of supply.

2 Exchange:
This part covers the market mechanism or exchange of
wealth through the forces of
demand & supply.

Perfect and imperfect competition

Behaviour of competitors.
 3 Distribution:
This part starts with the theory of
distribution of rewards to four factors of production.
 Wages
 Rent
 Interest
 Profit.
 4 Consumption
This part focus on the behaviour
of a consumer
 Maximize the total utility
 Minimize the expenditure
 Importance
 To make economic policies for efficient
production.
 To understand the working of private
enterprise economy.
 To study the welfare of the economy.
 Limitations
 It studies a part of economy not as a whole.
 Similarly a single firm or an industry is in
progress but the whole economy may be in
depression.
Farman Ali
M B A 2nd

Roll No:10609
 Macro Economics
Definition:

 A study of the economy as a whole, particularly the

interaction of its various components.

 The study of the entire economy in terms of the total

amount of goods and services produced, total income
earned, the level of employment .
Components of Macro Economics

 National Income
 Inflation
 Deflation
 Trade Cycle
 Aggregate Unemployment
 Importance
 It studies overall market structure.
 Overall production cost is considered.
 It is helpful to understand the functioning of
complete economic system.
 Economics policies can’t be made just for an
individual but made for nation as a whole.
 Overall tax expects of the country is considered.
It is helpful to find the solution of current
economic problems
e.g. unemployment, inflation and poverty.
 In real view whole economy is more important
than the individual.
 Limitations
 Individual is ignored in macro economics but the
individual welfare is main aim of economics.
 Macro economics don’t show the individual difference.
For instance, general price level may be stable but the
prices of food grains are unbearable for the poor.
 Differentiation
 Study of any specific  Study of economy as a
individual unit whole
 e.g.  e.g.
A Consumer, A Firm, An National Income, Inflation,
Industry, Fop's Trade Cycle etc.
 Micro approach should be  Macro approach should be
applied when individual applied when aggregate
cases are to be examined. problem are involved.
 Economic policies made for  Economic policies made for
efficient production. nation as a whole.
 Macro analysis is helpful to
find the solution.
 Conclusion
The Micro and Macro economics are
interdependent. Both approaches help to
analyze the working of the economy.
Sometimes Micro analysis is need and
sometimes Macro analysis is need, but both
are important and we can’t neglect any one.
Macro approach should be applied when
aggregate problems are involved and Macro
approaches should be applied when individual
cases are to be examined.
Questions??

Thanks