Definition etc.) Concept of opportunity cost – It is

Definition of economic

It is saying economic
is the art but in the modern society it is named social science. Considering of
economic they will think about how cost and resources are efficient for human
being’s unlimited wants.

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There are micro
economic and macro economic

Micro economic concern
the behavior of  individuals and firm
decision making. Eg. Individuals, firms and household manage money how to spend
efficiently than organization and internal level.

Micro economic issues

Choices –  All society have unlimited wants and if you
want to choose something, you are going to face opportunity cost. Because
resources are limited in production (labor, land, machine etc.)

Concept of  opportunity cost –  It is referred alternative cost of resource.
for  eg. You spend the time at bar after
finishing  job, you cannot be having
dinner with your family at home and you have no time to watch TV something
else.

Rational economic
decision making

Individual always make
logical decision which support people satisfaction and their highest
self-interest.

It is considered
marginal cost and marginal benefits.

Marginal cost

When production made
one additional unit, the total cost of production is incurred for one more unit
of good and service.

Marginal benefit

Marginal benefit is
additional benefit caused by consumption of one additional unit of good and
service .

In addition what is the
different between marginal cost and marginal benefit.

When business are
planning to produce good or services to customer , They focus on how much it is
charged for incremental costs and they expect how much they get benefits.

Microeconomic objective

There are efficiency
and equity

Efficiency

It is important for a
business to have efficiency and effectiveness.

Every business maintain
standard, goal and profitability. .

Eg. Business expect
lowest prices in production or services but good to be in possible good quality.

 

Equity

Equity means which everyone
comes from different field. Therefore they have different background, idea,
culture and ethic but they should have same opportunity and fairness where they
are working  place.

(Glen, 2013)Macro
Economic Issues

Macroeconomics mentions to the ‘big picture’
study of economics, so looking at concepts like industry, country, or global
economic factors. Macroeconomics contains studying  concepts such as a country’s Gross Domestic
Product (GDP), unemployment rates, growth rate,  cyclical fluctuations and how all these
concepts has relationship with each other.

(i)                 
Relationship with growth and inflation

Economic
growth is explained by  Endogenous Growth
Theory that is related to the  matters of
production  for example; economies of
scale,  encouraging technological
changing and  increasing in population.
In endogenous growth theory, the growth rate has rely on one variable: for
example. When it face inflation , it will affect  decreasing on the rate of return  that will reduce aggregation of capital  and decline the growth rate.

(Atish Ghosh and Steven Phillips, 1998)

The authors state
which a relationship occurs between inflation and growth, it is not likely to
be a simple one. The bivariate relationship may not be linear; and the
correlation between inflation/disinflation and growth maybe quite different
from the steady-state inflation-growth relationship. Ghosh and Phillips argue
further, that in a multivariate case, the relationship becomes even more
complicated. The inclusion of other determinants of growth reduces the apparent
effect of growth, for a number of reasons. These include amongst others, the
idea that some of the other determinants may be functions of inflation
themselves. In this paper, they attempt to address these various methodological
problems in an attempt to examine the relationship between inflation,
disinflation and output growth.

Unemployment
in macroeconomic mention

 

 

There are five activity of circular flow of income.

Individual

Business

Financial
institutaion

Government

International
trade

Individuals
operate business there will appear income and expenditure on good and services.
When they earn profitable amount they have saving money and money go to
financial institution and they can invest more in business and they also have
to pay taxes from their profit to the government. It is going to occur money
circulation and money from government flows to the business as expenditure. If
individual own import and export business, it will happen as international
flow..

Individuals ? This sector is combined firms
and household  in economy.  They are also productive
resources  and the consumers is
necessary included . ? Individuals deliver the source of
operation such as skill labors and technologies 
to the  businesses, that they can
produce  goods and services. On the other
hand these resources can happen individual income , interest and profitable
thing in the businesses .When firms and households are
starting the business, production of good , selling and distribution product
will be considering according to economic. (except financial services). ? Their process is involved purchasing raw materials for
production and consuming material  to be
finished good and it can be sold in the market . ?
Individuals and businesses are reliant each other . One more important
consideration  is financial institutions .We
cannot run properly  even small  business  if we don’t have enough financial situation.
So borrowing and lending of money are consisted of those institutions.  For individuals and firms financial
institutions are the most essential to be saved and invested.