Microeconomics

Papua New Guinea

DIVINE WORD UNIVERSITY

FACULTY OF HEALTH SCIENCE

DEPARTMENT OF HEALTH MANAGEMENT

HM302 MICROECONOMICS

Lecture Mr. Sion

Assessment Task #2: Written Assignment

Task 2.1: Descriptive Essay

Criteria: Identify economic theories/models and their significance in relation to the role of decision making

Length: 2000 words

Task 2.1

Explain what microeconomics is and what significance it has on decisions made at the different sectors within the economy of PNG.

By Philip George HM3

February 2013

Introduction

As all the other fields of study which can be broken down to specific areas to deal with consciously, the field of economics is classified into two broad branches. The two broad branches are differently defined as the base term economic is added to two different prefixes, ‘macro’- and ‘micro’- respectively. By adding the base term economic to prefixes macro- and micro- accordingly, the field of economics is being specified to two broad branches. That is, macroeconomics and microeconomics which in general terms, macroeconomics is the economic that concerns a nation as whole whereas microeconomics concerns with individual, household, and firms. The term economics itself possesses its definition when relating production, consumption and distribution of wealth to societies. According to (Investopedia, 2013) economics is “A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.”

This essay will explain only microeconomics as one of the two branches of economy, the sectors of the economic system and the economic theories and models.

What is Microeconomics?

As elaborated in the introduction the term microeconomic constitutes the prefix micro- and base economic were the prefix micro- means small, thus Microeconomics is the study of the economic behaviour of small economic groups (About.com, 2013). At micro or the small branch...