Macroeconomics examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors.
Microeconomics is the study of parts of economics concerned with particular markets, and segments. This study looks at analysis in a single household, a company, or a specific industry. Microeconomics looks closely at supply and demand in single markets, consumer’s behaviors and choices.
However, Macroeconomics is the study of the economy as a whole unit or its elementary sectors or aggregates, such as the government, household, and business subdivisions.
Class based on what you have read in this chapter, explain the law of demand. Why does a demand curve slope downward? How is a market demand curve derived from individual demand curves?
Based on this chapter, law of demand is when other factors are the same, the quantity of demand increase as prices falls, and the demanded quantity decreases as prices rises. The demand curve slope downward reflects the demand law philosophy because there a negative relationship between price changes and the demanded quantity of a particular product. If there are two buyer representing two different individual demand curves
There are a variety of modern definitions of economics. Some of the differences may reflect evolving views of the subject itself or different views among economists.
The earlier term for 'economics' was political economy. It is adapted from the French Mercantilist usage of économie politique, which extended economy from the ancient Greek term for household management to the national realm as public administration of the affairs of state. Sir James Steuart (1767) wrote the first book in English with 'political economy' in the title, explaining that just as:
Oeconomy in general [is] the art of providing for all the wants of a family, [so the science of political oeconomy] seeks to secure a certain fund of subsistence for all the inhabitants, to obviate every circumstance which may render it precarious; to provide every thing necessary for supplying the wants of the society, and to employ the inhabitants ... in such manner as naturally to create reciprocal relations and dependencies between them, so as to supply one another with reciprocal wants.
The title page gave as its subject matter "population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit and taxes".
The philosopher Adam Smith (1776) defines the subject as "an inquiry into the nature and causes of the wealth of nations," in particular as: a branch of the science of a statesman or legislator [with the twofold objective of providing] a plentiful revenue or subsistence for the people ... [and] to supply the state or commonwealth with a revenue for the publick services.
J.-B. Say (1803), distinguishing the subject from its public-policy uses, defines it as the science of production, distribution, and consumption of wealth. On the satirical side, Thomas Carlyle (1849) coined 'the dismal science' as an epithet for classical economics, in this context, commonly linked to the pessimistic analysis of Malthus (1798). John Stuart Mill (1844) defines the subject in a social context as:
The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object.
Alfred Marshall provides a still widely cited definition in his textbook Principles of Economics (1890) that extends analysis beyond wealth and from the societal to the microeconomic level:
Economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one