ECONOMICS

1. INTRODUCTION:

The discipline was renamed in the late 19th century, primarily due to Alfred
Marshall, from "political economy" to "economics" as a shorter term for
"economic science". At that time, it became more open to rigorous thinking
and made increased use of mathematics, which helped support efforts to
have it accepted as a science and as a separate discipline outside of
political science and other social sciences.

2. MICROECONOMICS:

Microeconomics examines how entities, forming a market structure, interact

within a market to create a market system. These entities include private and
public players with various classifications, typically operating under scarcity
of tradable units and light government regulation. The item traded may be a
tangible product such as apples or a service such as repair services, legal
counsel, or entertainment.

2.1 DEMAND AND SUPPLY:

Prices and quantities have been described as the most directly observable attributes
of goods produced and exchanged in a market economy .The theory of supply and
demand is an organizing principle for explaining how prices coordinate the
amounts produced and consumed. In microeconomics, it applies to price and
output determination for a market with perfect competition, which includes the
condition of no buyers or sellers large enough to have price-setting power.
2.2Firms:

People frequently do not trade directly on markets. Instead, on the supply side,
they may work in and produce through firms. The most obvious kinds of firms are
corporations, partnerships and trusts. According to Ronald Coase, people begin to
organize their production in firms when the cost of doing business becomes lower
than doing it on the market. Firms combine labour and capital, and can achieve far
greater economies of scale (when the average cost per unit declines as more units
are produced) than individual market trading.

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