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In: Economics
What are the basic economic questions dealt by Micro Economics?
What are the basic economic questions dealt by Micro Economics?
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Expert Solution
Microeconomics deals with the following questions:
i. What goods are to be produced and in what quantities? - This question deals with the types of goods that are to be produced by the firm and the quantity in which they are to be produced.
ii. Who will produce them and how? - After taking the decision on the type of goods to be produced, the firm must decide upon the technique (labour-intensive or capital-intensive) required to produce those goods.
iii. To whom & how the wealth, so produced, shall be distributed? - This question is concerned with the distribution of income or wealth and the channel through which this wealth is to be distributed.
iv. How resources are to be allocated to ensure production and consumption in an efficient manner? - Efficient allocation of resources means distribution of resources in a manner such that they reach the individual or group who values it the most.
Micro-economics deals with four type of questions.
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