Macro vs. Micro

Lesson objectives Define key terms in the field of business economics Display understanding of the use of graphical tools as representations of macroeconomic and microeconomic principles Identify the differences and similarities between macroeconomics and microeconomics Describe why business economics is an important field of study

Key Vocabulary Economics policies Economics Free enterprise economy Households Macroeconomics Market economy Microeconomics Need Resources Standard of living Want

How do Businesses make choices? Economics is the study of how people and organizations make choices in conditions of scarcity Individuals and households make choices in order to make the most out of their limited resources to meet their needs and wants Businesses likewise make choices as they convert limited resources into goods and services to meet our needs and wants, thereby maximizing their profit

How do Businesses Make Choices? How does a company decide what to make? The average price of a Big Mac is $4.80. What does it cost to produce? Who buys it? Is this a good price? For whom? Price Yes/no For Whom $4.80 $6.00 $2.50

How do Businesses Make Choices? All of these business questions are just as relevant to the economist, whose primary area of study is how people, organizations, and societies make choices

The Market Economy Get into pairs and discuss the following: Who makes decisions about whether or not McDonald’s is going to sell Big Macs? Who decides what price to charge for them? Who determines how much to pay McDonald’s employees? What goals is McDonald’s working toward when it makes these decisions?

The Market Economy A market economy is built upon two key players—consumers and producers. The interaction between these two key players answers the first two questions posed. Another two key players in the market economy—businesses and individuals (as employees or prospective employees), and the interaction between them—answers the third question. Profit is created by providing products that consumers want to buy is the answer to the final question.

Choices and Limited Resources Presentation

Definition of Macroeconomics Macroeconomics is an area of study that: seeks to determine the aggregate (total) effect of interaction between all buyers and sellers in a market by measuring: gross domestic product (GDP): the total amount of goods and services a country (the United States, for example) produces in a year. rate of inflation: how much prices go up in a given amount of time. unemployment rate fiscal policy: where and how much money the government spends in the economy and takes in through taxes. monetary policy: how much money is in circulation in the economy (this is referred to as monetary policy).

Definition of Microeconomics Microeconomics is an area of study that: seeks to determine how individuals and businesses make decisions and the consequences of these decisions by measuring: the impact of supply and demand on a business. the costs and benefits of individual and business consumption and production and pricing decisions. the effects of competition.

Definitions of Micro and Macro economics Download- Reading: Microeconomics Explained Download- Reading: Macroeconomics Explained Highlight or underline key terms and concepts

Examples of Macro-economics Today, you are going to research current macro economic events. Your goal is to identify 5 current events (everyone at your table must have DIFFERENT events) that are related to macro economics. First summarize the article (who, what, when, where, why, or how) Next describe how it fits into the macroeconomic picture. Last attach a link to the article online Submit to the website.

Examples of Microeconomics Today, you are going to research current micro economic events. Your goal is to identify 5 current events (everyone at your table must have DIFFERENT events) that are related to micro economics. First summarize the article (who, what, when, where, why, or how) Next describe how it fits into the microeconomic picture. Last attach a link to the article online Submit to the website.

Venn Diagram Download- Venn Diagram: Macroeconomics vs. Microeconomics Think about how different players in a market economy might be more or less impacted by what each field covers Turn into dropbox

Compare and Contrast How would you incorporate the terms: Business Individuals Government Non-profit agencies Indicate the importance to or the impact each term has the given category Why would governments and businesses be more concerned with macroeconomics than individuals? Why would businesses and individuals be more concerned with microeconomics than government?

The Power of Graphs Download- Assignment: The Power of Graphs Which graph gets the point together and why? Because economic information is primarily numbers, it lends itself to graphic representation. Both economists and businesspeople love graphs because they get a lot of information across in a concise and clear way

The Power of Graphs Create a nonlinguistic representation of the macroeconomic issue of national debt Be sure to use correct spacing and keep things to scale

Big Mac vs. the Whopper What would happen to Big Mac sales if Burger King increased the price of the Whopper to $5? Cut the price to 50¢?

Enrichment Watch the 20-minute “Story of Stuff” online at http://www.storyofstuff.com/ and then write two short responses. The first should be about how the video relates to microeconomics. The second should be about how it relates to macroeconomics.

Cross-Curricular Integration Research the command economy system and to complete a Venn diagram comparing it with a market economy.