The Difference between Macro and Micro Economics & Price Elasticity of Essay

The Difference between Macro and little Economics & toll snap bean of Demand - Essay ExampleMicroeconomics focuses on the solicit and supply of a single mathematical product. It studies the behaviour of a particular institute in the market, helping in the management of that institute. It helps in answering various questions such as what type of a product is to be produced how lots of that product is to be produced to meet the market pick ups how is it going to be produced what raw materials atomic number 18 going to be utilise what type of fuel would be used for whom the good is to be produced and many different such questions are answered via microeconomics. So all the choices a particular person engages comes under microeconomics because he is just concerned with what he is producing rather than the total production of a particular good in an economy. Macroeconomic issues are relate to the chemical equilibrium between fuse supply and aggregate demand. If the aggregate demand gets much higher than aggregate supply, inflation and balance of payment deficit (exports become greater than imports) can take place. On the former(a) hand, if the aggregate demand gets lower than aggregate supply, recession and unemployment may occur. So it is crucial to maintain the balance between aggregate supply and aggregate demand and macroeconomics helps in doing so. ... Task 2 The legal injury Elasticity of Demand (PED) measures how much the quantity demanded of a commodity responds to a change in damage of that commodity. Price Elasticity of Demand can be calculated by using the following formula Price elasticity of demand = Percentage change in quantity demanded / Percentage change in price For example, if there is a 40% rise in oil price and the demand for oil come by 10% then Price Elasticity of Demand will be -10% / 40% = -0.25. The determine of PED is always negative, because demand graphs are mostly downward slopping, meaning that price and demand always go opposite. An increase in price will result in a decrease in demand and vice versa. Thus there will always be a negative figure which would make the sign negative. If the quantity demanded responds substantially to the changes in price, the demand for that good is said to be elastic. On the other hand, if the quantity demanded responds slightly to changes in prices, the demand for that good is said to be inelastic. PED helps us in find out whether a good has elastic or inelastic demand. Ignoring the negative sign, if PED is greater than 1 then the demand will be elastic and if PED is less than 1 then the demand will be inelastic. forecast the example of oil. A rise in the price of oil may result in a slight decrease in the demand of oil. The vehicles will continue to use oil, so state would nurture to pay higher prices. The slight decrease in demand may occur because some people might shift to bicycling. In this case the demand for oil is inelastic. Goods which are classified as necessities afford inelastic demand. A patient would have to buy a life saving drug how much expensive it might be