Economics-For Managers

Unlimited human wants and scarce resources force people to make choices between various goods and services. Economics tries to provide solutions to the problem of scarcity and choice. The field of economics is divided into two areas; microeconomics and macroeconomics. In this chapter we discussed the importance of microeconomics. We examined how it provides answers to questions like what to produce, how to produce, and for whom to produce.

We have discussed the difference between microeconomics and macroeconomics. We also studied the various kinds of economies: market economy, command economy and mixed economy. As individuals have to choose between alternatives, opportunity cost plays a significant role in the decision making process. With the help of the production possibility curve, the economy can look at ways to utilize its limited resources. Partial equilibrium analysis (PEA) and general equilibrium analysis (GEA) are two different approaches for analyzing the functioning of an economy with inter-related markets.