Meaning of Economic environment Full Topic - UGC NET Commerce Notes | Commerce Study Notes

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Meaning of Economic environment Full Topic - UGC NET Commerce Notes

Meaning of Economic environment - UGC NET COMMERCE NOTES - Unit I 

Meaning of Economic environment - UGC NET COMMERCE NOTES - Unit I Consistent with this focus, primary textbooks often distinguish between microeconomics and macroeconomics. Microeconomics examines the behaviour of basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the entire economy  and issues affecting it, including unemployment of resources, inflation, economic growth, and the public policies that address these issues .

Definitions  of Economic Environment - Commerce Notes 

There are a variety of modern definitions of economics. Some of the differences may reflect evolving views of the subject or different views among economists. Scottish philosopher Adam Smith  defined what was then called political economy as "an inquiry into the nature and causes of the wealth of nations", in particular as:

J.-B. Say, 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  coined "the dismal science" as an epithet for classical economics, in this context, commonly linked to the pessimistic analysis of Malthus . John Stuart Mill  defines the subject in a social context as:

Alfred Marshall provides a still widely cited definition in his textbook Principles of Economics  that extends analysis beyond wealth and from the societal to the microeconomic level

Microeconomic - Microeconomics examines how entities, forming a market structure, interact within a market to create a market system. These entities include private and public players with various classifications, typically operating under scarcity of tradable units and government regulation. The item traded may be a tangible product such as apples or a service such as repair services, legal counsel, or entertainment.

Various market structures exist. In perfectly competitive markets, no participants are large enough to have the market power to set the price of a homogeneous product. In other words, every participant is a "price taker" as no participant influences the price of a product. In the real world, markets often experience imperfect competition.

Forms include monopoly, duopoly, oligopoly, monopolistic competition, monopsony, and oligopsony . Unlike perfect competition, imperfect competition invariably means market power is unequally distributed. Firms under imperfect competition have the potential to be "price makers", which means that, by holding a disproportionately high share of market power, they can influence the prices of their products.

Microeconomics studies individual markets by simplifying the economic system by assuming that activity in the market being analysed does not affect other markets. This method of analysis is known as partial-equilibrium analysis . This method aggregates  in only one market. General-equilibrium theory studies various markets and their behaviour. It aggregates  across all markets. This method studies both changes in markets and their interactions leading towards equilibrium.

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