CHIT-CHAT TIME Commerce Heaven
(In this conversation
after getting 1000 Rupees Khalid is going with his friend Tariq to purchase
some articles)
Khalid: Hello
Tariq, How are you?
Tariq: I
am Fine Khalid. What about you?
Khalid: I
am also fine. Yesterday, my mom gave me 1000 rupees as a gift on my birthday
Tariq: Oh!
Wow! Great. So have you planned where you are going to spend 1000 Rupees?
Khalid: Yes
I have many options. I want to purchase novels, puzzle cube, Fancy bracelets
and parker pen (Beta Gold). Will you come with me for shopping?
Tariq: Yeah
sure. Let’s go.
Khalid: (At
the Shop)
Uncle, please show me some interesting novels, Parker pens,
bracelets and puzzle cube.
(Shopkeeper showing Khalid all
the items demanded)
Tariq: Uncle,
please tell me how much amount I have to pay for the items selected.
Shopkeeper: Son,
Your bill is of Rs.1200.
(Khalid is bargaining with
the shopkeeper, and finally paid 1000 rupees to shopkeeper)
Khalid: Thank
you uncle, for this discount.
(Khalid is coming with his
friend (Tariq) back to home)
Tariq: Have
you ever wondered that if we add whole demand made in Pakistan by all the
consumers what amount will it be?
Khalid: Hmm.
It will be huge amount. Ok Bye. See you tomorrow.
(Khalid reached home and
have conversation with his Baba)
Baba: Hello
son, from where are you coming?
Khalid: Today
I went to market to purchase some articles from the money I received on my
birthday.
Baba: Okay
Great! So what did you buy?
Khalid: Parker
Pen, One bracelet and 2 novels. This cost Rs.1000 after bargaining.
Baba: Very
nice.
Khalid: Dad
if we add all the Purchases (demand) made by all consumers in Pakistan and
whole of the Sale (supply) by all sellers in our country it will be huge
amount. Does someone calculate that amount?
Baba: Yes.
When you purchased these things and that seller sold these things. This
Purchase and sale was made at Individual person’s level and Individual Firm’s
level. This is a small (Micro) Level.
But when we talk about purchases and sales made in whole country
then this will be at the Biggest (Macro) level.
Our government collects and uses this data.
Let’s Understand
(1) MICROECONOMICS AND MACROECONOMICS
Economics is broadly divided into two parts. These are:
- Microeconomics
- Macroeconomics
(a) MICROECONOMICS
Microeconomics is the study of the economic behavior of individuals, households and firms’ in decision making and allocation of resources.
Microeconomics is concerned with:
- Supply and demand in individual (Textile Market) markets
- Individual consumer behavior. e.g. Consumer choice theory
- Individual producer behavior.
- Individual labor markets, g. demand for labor wage determination in that individual market
(b) MACROECONOMICS
Macroeconomics is the branch of economics that deals with the behavior and performance of an economy as a whole.
It is generally the study of central issues like
- Employment
- The growth rate of National output
- GDP
- Inflation
- General Price level and stability
(2) VITAL COMPONENTS OF MICROECONOMICS
(a)Theory of consumer behavior
This theory states that a rational Consumer allocates his income for the purchase of different goods and services with the aim to maximize his satisfaction.
(b) Theory of Producer behavior
This theory states that a rational producer has to decide what to produce and how much with the aim of profit maximization.
(c) Theory of Price
This is the theory which tells us how prices are determined in the market.
