Answer to Question #250529 in Microeconomics for Muskan

Question

1.     What are the major objectives of microeconomics? Write a brief definition of each of these objectives. Explain carefully why each objective is important?

Answer 1

1. Equity

It's attained when wealth and income are distributed fairly within a society. What constitutes equity to one person may be different to another.

2.Stability

This is attained by reducing variation in production, prices and employment. Stability is identified by monthly and yearly changes in some economic indicators such as inflation rate and production growth rate. Stability is important because uncertainties in the economy are eliminated.

3. Growth

It's attained through increase in production of goods and services. It's indicated by measuring the growth rate in production. Economic growth can be indicated by an increase in amount of resources in terms of land, capital and entrepreneurship used to produce goods.

4. Efficiency

Efficiency is attained when people gain the maximum amount of satisfaction from that available resources. At a level of efficiency, a society cannot change the way those resources are used to another way that will increase total satisfaction obtained.