293766200 - Economics Economics focuses on optimisation and...

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1 Economics ± Economics focuses on optimisation and equilibrium ± Macroeconomics: the general economy and asks whether macroeconomic indicators such as inflation, unemployment and the cost of capital are in equilibrium ± Microeconomics: optimising of behaviour of consumers and producers and asks whether the observed equilibrium prices and quantities in each market are economically efficient.
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2 Competition vs. monopoly ± Monopoly - regulation ± Competition - market ± Economically efficient: ± Under perfect competition the interaction of many buyers and sellers yields a market price equal to the cost of producing the last unit sold.
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3 Micro vs. macro economics ± In a book example: single market – microeconomics ± In reality: many markets interact – macroeconomics ± E.g. electricity market and natural gas market interacts; markets in one area may influence markets in other areas; ± Partial equilibrium to general equilibrium for the economy as a whole – macroeconomics
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4 Macroeconomic influence
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293766200 - Economics Economics focuses on optimisation and...

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