Livestock Economics, Marketing and Business Management

SUBJECT MATTER OF ECONOMICS

• Subject matter of economics is divided by modern approach in two as
  • Micro economics
  • Macro economics

Micro economics

• It is also called as Price Theory. Price theory explains the composition, or allocation, of total production- why more of some things is produced than of others.
• The word Micro means a millionth part. When we speak of microeconomics or the micro approach, what we mean is that it is some small part or component of the whole economy that we are analysing.
• Thus, micro economic theory studies the economic behaviour of individual decision - making units such as consumers, resource owners and business firms.

Macro economics

• It is also called as Income Theory. Income theory explains the level of total production and why the level rises and falls.
• Macro - economics is concerned with aggregates and averages of the entire economy, such as national income, aggregate output, total employment, total consumption, savings and investment, aggregate demand, aggregate supply, general level of prices, etc.,
• It studies the behaviour of economic system as a whole or all the decision making unit combined together.

Positive or Normative Science

• Economics is both positive and normative science. Positive science deals with things as they are. Hence it addresses what it is. Eg. The feed unit is sick.
• The normative science makes distinction between right and wrong of a thing.
• It prescribes what it should be. Positive science describes while normative science evaluates.