BBA Note Micro Economics Meaning Nature And Scope

Micro Economics Meaning Nature And Scope

Economics is the study of those activities of human beings, which are concerned, with the satisfaction of unlimited wants by using the limited resources. Micro means the millionth part. The term micro has been taken from the Greek word mikros meaning small. Under microeconomics we study the individual units like a consumer, a firm, an industry, price determination of a particular commodity etc. In short the microeconomics deals with the study of the economic problems of a single unit like a firm or small economic units or resource owners. The main objective of microeconomics is to study the principles, policies and the problems relating to the optimum allocation of resources. From the theoretical point of view it tells us the functioning of a free enterprise economy. It explains us how through the market mechanism goods and services produced in the economy are distributed.  

Nature and scope of Micro Economics

In the nature of economics we may consider whether it is a science or an art. Science not only means the collection of facts but it also means that the facts are arranged in such a manner that they speak for themselves. It means that some laws are discovered through these facts. Thus science is a systematic body of knowledge concerning the relationship between causes and effects of a particular phenomenon.

Characteristics of a science

1. First of all the facts are observed. E.g. when price rise the demand contracts.
2. The facts in this step are properly classified. Like if price falls how much the demand has fallen.
3. After the compilation of facts and having knowledge about the magnitude of a problem a law is framed keeping onto consideration the cause and effect of a fact. E.g. Law of demand
4. The final feature of science is by applying the scientific laws to real life. It is verified whether they are valid or not.
   
   
        Thus from the above discussion it could be concluded that economics is a science. But some economists believe that it is not an exact science.  
   
   
   Whether it’s a social science or a natural science
   
   
   
   
   Arguments in favour of social science

1. Economics is a systematic study. It is the study of the interrelated activities like production consumption and exchange of wealth.
2. Laws of economics show a cause and effect relationship between them
3. Laws of economics are based on real experiences of life.
   
   
   Arguments against economics as a natural law

1. The laws of economics are not the exact laws. Like law of economics does not operate if there is a change in the income of the person or a change in price of substitute goods.
2. Economics laws are far from universal applicability. These laws cannot be applied in all situations and at all the times.
3. The laws of economics cannot be verified in the laboratories. In the exceptional cases even the information or the results obtained through the application can prove to be futile.
   Thus economics is not a natural science. It is a social science.
   
   
   Economics As A Positive Or A Normative Science
   
   
   Positive science is that science which studies an accurate and true description of events as they happen. Thus it deals with what, how and why. Normative science is suggestive in nature. Normative science tells us what ought to be.
   
   
   Economics as a positive science
   
   

1. Positive science is logical whereas normative science is emotional. Therefore it is more exacts it is based on the logic.
2. If economics studies only the realities of the real world then the chances of the disagreement are less, as the case would be if it studies both.
3. The economists cannot make the rational judgments if they try to analyze both what is and what ought to be.
   
   
   
   
   
   
   
   
   Economics as a normative science
   
   
   1.  Economics would offer more meaningful conclusions if it gives suggestions too long with the facts.
   2.  Economics will be more useful if it is fruit bearing too along with the light bearing. Most of the people study economics for the fruits and not for the light merely.
   3   if the economist synchronizes the analysis of economic problems with concrete economic policies he would save time. Else it would be difficult if one person finds the solutions and the other tries to justify those solutions.
   
   
   Thus the argument can be put to an end only by saying that it is both the positive as well as a normative science
   
   
   Arguments in favour of economics as an art
   Many economists like Marshall, Pigou etc. believe that economics is an art also besides being a science
   Economics as an art
   
   

1. Economics offer a solution to the problems of human beings. It tells us how we can make the judicious use of our resources.
2. It is through the art that we can verify the economic laws. For example the law of demand
3. The doubts can be removed by dividing the economics into science as well as an art.
   
   
   Arguments against art
   
   

1. Science and art are different. If economics is science it cannot be art and if it is an art it cannot be a science. 
2.  Economic problems are influenced by social and political nature. Therefore economics cannot be considered from the economic point of view only.
   UTILITY
   It’s the want satisfying power of a commodity.

1. Utility is subjective. It depends upon the human wants.
2. Utility keeps on changing with time and place.
3. It need not be always useful.
4. Utility has nothing to do with the morality.
   Measurement of utility
   It can be measured both in terms of money as well as in terms of units. If two persons pay different sum of money for the same amount of commodity then it is the measurement in terms of money.
   Marshall, Jevons and Menger etc have tried to measure it in terms of cardinal numbers. Pareto, Allen, Hicks etc. measured it in ordinal an term that is Indifference curve approach.
   Utility has three concepts:

1. Initial utility
2. Marginal utility
3. Total utility
    
   Marginal utility can further be divided into Positive Marginal Utility or Zero Marginal Utility or Negative Marginal Utility
   
   

Quantity	Total utility	Marginal utility
0	0	-
1	8	8
2	14	6
3	18	4
4	20	2
5	20	0
6	18	-2

Opportunity costs

Opportunity costs may be defined as the expected returns from the second best use of the resources which are foregone due to the scarcity of resources. E.g. if with a sum of Rs. 1 lakhs one can purchase two machines. One yields a  profit of Rs.20000 and the other a profit of Rs. 10000. Now the buyer will forego the use which is less productive.  It can also be termed as economic rent

                                      (Rs. 20000 – Rs 10000 = Rs. 10000)

Explicit and Implicit costs

Marginal and Incremental costs

It is the change in Total costs due to the production of one more or one less unit of a factor of production.

                                      MC = TC_n – TC_n-1

     Incremental costs refer to the total additional costs associated with the decisions to expand output or to add a new variety of product etc. In the long run when firms expand their production they hire more of men, machinery and equipments. These expenditures are included in the incremental costs. These costs also arise due to change in the product lines, addition or introduction of a new product, replacement of worn out plant and machinery, replacement of old techniques of production with a new one etc. 

     Sunk costs are those costs, which cannot be increased or decreased by varying the rate of output. Example once it is decided to make incremental investment expenditure and the funds are allocated, all the preceding costs are considered to be the sunk costs as these costs cannot be recovered when there is a change in the market decisions.

EQUILIBRIUM

     Equilibrium is a state of balance. In fact sometimes the modern economics is also called as an equilibrium analysis. When the forces act in the opposite direction is in the state of rest they are called as to be in the equilibrium. Equilibrium can be a stable equilibrium, unstable equilibrium or a neutral equilibrium.

1)      Stable equilibrium is that equilibrium in which the object concerned after having been disturbed reverts back to the original state.

 2)    In an unstable equilibrium a slight disturbance further evokes disturbance.

1.     In the neutral equilibrium the disturbing forces neither bring it back nor they  
          can take it away from the equilibrium position.
   
   
   Short term or the long-term equilibrium
        In the short run demand plays an important role in the determination of price and in the long run both demand and supply plays an important role.
   
   
   
   
   
   
        Partial and general equilibrium
        Partial equilibrium excludes certain variable and studies a few selected items at a time. This method takes into consideration the impact of one or two variables and keeps all others constant. E.g. demand and supply depends upon many variables but for the sake of simplicity we study only a few aspects. 
   
   
        In case of general equilibrium analysis

     An analysis that treats various individual units and markets as interrelated and attempts to trace the consequence of an economic event is called the general equilibrium. In the process of making the decisions the consumers as well as the firms affect the prices of the commodities. The changes in the prices serve as signals to various consumers and firms that affect their decisions accordingly. In this way the changes in the prices will go on bringing the changes in the quantities supplied and demanded until equilibrium in all the markets is not achieved simultaneously.

     Static and dynamic approaches

     The word static generally means a position of rest but in economics it means a state in which there is a continuous, regular, certain and constant movement without any change. According to Clark there is an absence of the following five types of changes 1) size of population 2) supply of capital 3) methods of production 4) forms of business organization and 5) the wants of the people. 

     Harrod is of the view that static analysis is concerned with the lack of investment in the economy. In static economics we do not study about the sequences, lags etc. its like ordinary demand and supply theory. Example people continue to be born and die but births equal deaths so there is no change in the numbers but the composition of population is changing. The major drawback is that it takes us far from the actual picture assuming the variables constant.

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BUSINESS ENGLISH

          1)                Open of Discussion

2)                Essay

3)                OpenFor Discussion:

4)                AdditionalWriting

5)                AdditionalWriting-1

6)                StructuredWriting Focus

7)                ThesisStatement

8)                YouHave Got Inappropriate Mail

9)                CHERRIESFOR MYGRANDMA

10)           PANDORA'SBOX

11)           MARRIAGEIS A PRIVATE AFFAIR

12)           THE GOODEXAMPLE

13)           THEWRETCHED STONE

14)           A PAINFULCASE

15)           TheSword of Damocles Source

16)           TheCricket

17)           KingJohn & the Abbot of Coterbury

18)           Gaia

19)           WhereThe Mind is Without Fear

20)           THETELEGRAM ON THE TABLE

21)           Cabuliwallah 

                     MR. KNOW ALL

22)           THELIBRARY CARD

23)           WHYGO TO UNIVERSITY?

24)           Stoppingby words on a snow evening

25)           Piano

BBS FIRST YEAR

1. BUSINESS STATISTICS!!!
2. PRINCIPLES OF MANAGEMENT!!!
3. ACCOUNTING FOR FINANCIAL ANALYSIS AND PLANNING!!!
4.BUSINESS ECONOMICS-I  !!!
5. BUSINESS ENGLISH !!!

6. Syllabus and Model question!!!

BBS NOTE AND IMPORTANT MATERIAL

BBS NOTE AND IMPORTANT MATERIAL

1. BBS FIRST YEAR !!!!

2. BBS SECOND YEAR !!!

3. BBS THIRD YEAR !!!

4. BBS FOURTH YEAR!!!

Piano

Piano

·        Theme:-

-         Nostalgia is the central idea of the poem "Piano".

-         It tells us memory is much sweeter then reality. It helps us to forget present reality.

-         This poem shows the relationship between past and present, memory and reality.

-         The poet remembers his childhood and forget the present reality.

·        Literal Comprehension:-

D.H. Lawrence, the famous Britist poet, mostly wrote about his childhood experience. This poem 'piano', he has presented the idea that memory or imagination is most powerful to forget the present reality.

            The poet is sitting with a women in a room at evening. The women is playing piano for the poet the tune of piano makes the poet remember his past childhood because his mother used to play piano in the past. He remembers those days he used to sit under the piano and his mother used to play and sing, smiling towards hm. He completely forgets his present because his sweet childhood memory. He remembered the evening when all his family members used to sit in a cozy parlor and his mother used to play piano. They used to sing hymns. The poet thinks that the music of that women is lamoures and he weeps like a child.

·        Interpretation:-

This poem tells us memory is much sweeter than reality when a man remembers his past happy days, he forgets the present difficult days music has the power to make us to remembers the happy past. In this poem, the poet remembers his mother and his childhood days when he listen the music of that women clamors, but the same music made him to remembers the past.

·        Critical Thinking:-

This poem shows the relationship between past and present, memory and reality But there are some issues which we couldn't accept of his poem. Man could remember his past but it is impossible to forget the present reality completely. Everybody should learn to live with present. How could a young man weep like a before a young women? Does his manhood allow his to do so? How could a sweet music become clamors? Sweet music is always better to listen.

·        Assilimilation:-

From this poem I realized that every people remember, their happy past and forget their present for some time like me. Nowadays when I listen the morning pray anywhere I remember my grandmother who used to pray when I was small child. Sometimes I remember those events when I hear the song again which would have played at the time when the event happened.

Stopping by words on a snow evening

Stopping by words on a snow evening

Theme:

-         Our senses lured towards the physical beauty & we forget our duty.

-         We should not forget our responsibility being charmed towards physical beauty.

-         We should do something before we die.

The poet is going somewhere at a snowy evening by riding on his horse back. When he saw the beauty of the forest he stops there. Later his horse made him to remember his destination and he moves a head.

"And miles to go before a head"

·       Literal Comprehension:-

Robert frost is a very famous modern American poet. His poems are very simple in language but with deep meaning. In this short poem, frost has presented the idea about physical beauty and responsibilities.

          The speaker is going to his house at evening by guiding on his horse back. It was a snowing evening. He was much attractive towards the beauty of the forest because it was covered with white snow. He forget his destination and he looked the beauty of forest and the lake which were frozen. He says that the owner of the forest couldn't see him stopping there because his house was a way in a village. There was no farm house  near there and the horse felt uneasy because it as a late evening and it was too cold. So the horse shook its head and rang the bell. The poet realize that he has to go. Then he say, through the forest is too much beautiful, but he was to go. He has to go miles away to get to sleep at his house.

·       Interpretation:-

The poet wants to say that our senses lured to us to the physical beauty and we forget our duty but we shouldn't our duty responsibility being attracted to us the enjoyment we have to do something before die. In this poem the snowing forest attracted the poet and he forget his destination but later he realized it and moved a head. So we should control over senses.

·       Critical Thinking:-

This poem has a deep philosophy meaning of our life. The last two lines of this poem "And miles to go before I sleep" (X2) has its whole them. Here 'Sleep' means "Death" and "Miles to go" means our long journey of life. So, this poem tells us that we should do many things before we die. But, this poem tells us we should not be in the control of our senses. It is true that nobody could forget the reality for a dream or enjoyment.

·       Assimilation:-

This poem was the favorite poem of Pandit Nehru. When he used to be in any problem he used to read two last line, "And miles to go before I sleep". I also get encouragement when I read those line to do something in life. It is true that our senses attracted towards physical beauty. When I like to read I couldn't because I like to sleep. But I shouldn't forget my responsibility or work.