1. Demand is the quantity demanded of goods and services at a given time. Demand has an inverse relationship as the law of demand states: as price increases, Qd decreases and as prices decreases, Qd increases. The relationship is negative therefore the demand curve is a downward curve with a negative slope. If a carpet costs 10kwd, there is 20Qd. When the prices decreases to 5KWD, Qd increases to 40. When price increases to 15KD, Qd for carpets decreases to 10.
Supply is the quantity supplied of goods and services at a given time. Supply has a positive relationship between price and Qd. When price increases, Qd increases. This is because firms want to generate more money. If carpets are to be sold at 10KWD, firms would only want to sell 5 of them as opposed to …show more content…
Microeconomics came before macroeconomics. The founder of microeconomics is Adam Smith whereas the founder of macroeconomics is Keynes. Adam Smith believed that there was no need for government intervention to fix the market or to adjust it to equilibrium. He believed that the free market can adjust itself alone. This is what microeconomics discusses: how demand and supply work to reach equilibrium. In addition, microeconomics looks at the individual, household and firm level. When drawing graphs, only one good can be mentioned at a time. Moreover, microeconomics looks at different types of markets such as: free market, oligopoly, monopoly and monopolistic competition. However, after the Great Depression, the free market wasn’t able to adjust itself and this is when Keynes came along and introduced government intervention. Macroeconomics is about the aggregate demand and supply of an economy (which means total goods and services within an economy). It discusses growth, inflation and unemployment. It looks at the economy as a whole. It introduces fiscal and monetary policies to fix any economic issue. Fiscal policies are the use of tax and subsidies whereas monetary uses interest rates and central
Supply is the quantity supplied of goods and services at a given time. Supply has a positive relationship between price and Qd. When price increases, Qd increases. This is because firms want to generate more money. If carpets are to be sold at 10KWD, firms would only want to sell 5 of them as opposed to …show more content…
Microeconomics came before macroeconomics. The founder of microeconomics is Adam Smith whereas the founder of macroeconomics is Keynes. Adam Smith believed that there was no need for government intervention to fix the market or to adjust it to equilibrium. He believed that the free market can adjust itself alone. This is what microeconomics discusses: how demand and supply work to reach equilibrium. In addition, microeconomics looks at the individual, household and firm level. When drawing graphs, only one good can be mentioned at a time. Moreover, microeconomics looks at different types of markets such as: free market, oligopoly, monopoly and monopolistic competition. However, after the Great Depression, the free market wasn’t able to adjust itself and this is when Keynes came along and introduced government intervention. Macroeconomics is about the aggregate demand and supply of an economy (which means total goods and services within an economy). It discusses growth, inflation and unemployment. It looks at the economy as a whole. It introduces fiscal and monetary policies to fix any economic issue. Fiscal policies are the use of tax and subsidies whereas monetary uses interest rates and central