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Microeconomics deals with the behavior of individual economic units. These units
include consumers, workers, investors, owners of land, business firms
Microeconomics explains how and why these units make economic decisions and
how economic units interact to form larger units- market and industries
Macroeconomics, deals with aggregate economic quantities, such as the level and
growth rate of national output, interest rates, unemployment, and inflation
The boundary betweem macro and microeconomics has become less and less
distinct in recent years
Microeconomics deals with both positive and normative questions. Positive
questions have to do with explanation and prediction, normative questions with what
ought to be.
Eq. Indonesian govt imposes a quota on the import of sugars. What will happen to
the price of sugars and to their production and sale ? What impact will this have on
consumers ? On workers in the sugar industries ? These questions are POSITIVE
analysis
What is the best due to the policy ? This involves normative analysis
Normative analysis is not only concerned with alternative policy option it also
involves the design of particular policy choice
Nortmative analysis is often suplemented by value judgement. Equity Vs Economic
efficiency etc.
Mikroekonomi
What is a Market ?
A market is a collection of buyers and sellers that interact,
resulting in the possibility for exchange
Competitive Versus Non-competitive Markets
The extent of a market refers to its boundaries, both geographic
and in terms of the range of products to be included in it
Arbitrage : a commodity is bought and sold in a world market but
the cost of transporting commodity is small relative to its value
and there is significant different price between locations.
Arbitrageurs (person who is doing arbitrage)
Real versus Nominal Prices
Nominal price of good is just its absolute price
Real price of a good is the price relative to an aggregate
measure of prices (CPI)
Mikroekonomi
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Mekanisme Pasar
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Mekanisme Pasar
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Long-run path of price
p0 and consumption
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Quantity
Elasticities of Supply and Demand
Inelastic Demand
Price
D
Q* Quantity
Elasticities of Supply and Demand
Price
DSR
DLR
Gasoline
Automobile
DLR
DSR
Quantity
In long run old cars
In long run change run out & buy new
to efficient car cars
Elasticities of Supply and Demand
Price
SSR SLR
SSR
SLR
Secondary
New Steel
Steel
Quantity
In long run the In long run stock of
capacity change scrap falls
Effects of Government Intervention-Price Control
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Excess Demand
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