Managerial Economics
The Rolling Stones once said: "You can't always get what you want.' T IS IS as well as the markets that true. For most people (even Mick Jagger), that there are limits to what you can these units comprise. have or do is a simple fact of life learned in early childhood. For economists, however, it can be an obsession.
Much of microeconomics is aboutdimu-s-the limited incomes that consumers can spend on goods and services, the limited budgets and technical know-how that firms can use to produce things, and the limited number of hours in a week that workers can allocate to labor or leisure. But microeconomics is also about
'ays to make the most of these limits. More precisely, it is about the allocatiOn of
Bearce resources. For example, microeconomics explains how consumers can best allocate their limited incomes to the various goods and services available for purchase. It explains how workers can best allocate their time to labor instead of leisure, or to one job instead of another. And it explains how firms can best allocate limited financial resources to hiring additional workers versus buying new machinery, and to producing one set of products versus another.
In a planned economy such as that of Cuba, North Korea, or the former
Soviet Union, these allocation decisions are made mostly by the government.
Firms are told what and how much to produce, and how to produce it; workers have little flexibility in choice of jobs, hours worked, or even where they live; and consumers typically have a very limited set of goods to choose from. As a result, many of the tools and concepts of microeconomics are of limited relevance in those countries.
•macroeconomics Branch of economics that deals with aggregate economic variables, such as the level and growth rate of national output, inter· est rates, unemployment, and inflation. Trade-Offs
In modern market economies, consumers, workers, and firms have much more flexibilityand choicewhen it comes to
Much of microeconomics is aboutdimu-s-the limited incomes that consumers can spend on goods and services, the limited budgets and technical know-how that firms can use to produce things, and the limited number of hours in a week that workers can allocate to labor or leisure. But microeconomics is also about
'ays to make the most of these limits. More precisely, it is about the allocatiOn of
Bearce resources. For example, microeconomics explains how consumers can best allocate their limited incomes to the various goods and services available for purchase. It explains how workers can best allocate their time to labor instead of leisure, or to one job instead of another. And it explains how firms can best allocate limited financial resources to hiring additional workers versus buying new machinery, and to producing one set of products versus another.
In a planned economy such as that of Cuba, North Korea, or the former
Soviet Union, these allocation decisions are made mostly by the government.
Firms are told what and how much to produce, and how to produce it; workers have little flexibility in choice of jobs, hours worked, or even where they live; and consumers typically have a very limited set of goods to choose from. As a result, many of the tools and concepts of microeconomics are of limited relevance in those countries.
•macroeconomics Branch of economics that deals with aggregate economic variables, such as the level and growth rate of national output, inter· est rates, unemployment, and inflation. Trade-Offs
In modern market economies, consumers, workers, and firms have much more flexibilityand choicewhen it comes to