Analyze the following statement using course material, "why is the science of economics concerned with the activity of households and individuals at one end of the scale, and that of multinational corporations and governments at the other?"
Economics is the study of how people use their limited resources to satisfy their wants and needs. Since all of the resources are scarce but people’s wants are unlimited, individuals and nations have to make decisions of how to allocate their resources most efficiently to obtain the maximum satisfaction of their wants. Fred E. Foldvary, an economist, stated that, “Economics is a social science, dealing with the activities of people, and it specializes in the production, distribution, exchange, and consumption of wealth, or the material needs and desires of human beings”. The science of economics composes of two distinct areas, which are microeconomics and macroeconomics. Microeconomics studies how households, individuals and firms make decision regarding the allocation of limited resources and price of goods and services. That is to say, microeconomics focuses on supply and demand, and how people take interaction in various markets. Macroeconomics, on the other hand, involves the “sum of total economic activities, dealing with the issues of growth, inflation, and unemployment and with national economic policies relating to these issues”, and the effects of government actions on them. From the perspectives of microeconomics and macroeconomics, it is obviously realized that “science of economics concerned with the activities of households and individuals at one end of the scale, and that of multinational corporations and governments at the others”.
Microeconomics, in an attempt, analyzes the certain respe ...