Introduction to Microeconomics

Introduction to Microeconomics
Introduction to Microeconomics

Consumer Goods

Introduction to Microeconomics:- Consumer goods are those goods that directly satisfy human needs, they are not used for the production of other goods.

Durable Consumption Goods

These are things that are used for many years – eg

1- T.V

2- Car

Semi-Durable consumption goods

These are goods which are use for 1 year or some more time.

1- clothes

2- Furniture

Non-Durable or Single Use Consumption Goods

These are items that are use only once

1- Injection


Services are non-material goods that directly satisfy human needs.

1- Doctor

2- Lawyer

read also:- What do you understand by consumer protection?

Capital Goods

Capital goods are those goods which are use for many years in the process of production. These are fixed assets of the producer. They depreciate in the use of these goods. Example Plant and Machinery

1- Machinery

2- Plant

Intermediate Goods

Intermediate goods are those goods which have not yet crossed the threshold of production.

Final Goods

Final goods are those goods which have crossed the boundary line of production and are ready for use by their end users.


Investment refers to the expenditure incurred by the producer on the purchase of all such goods in which his stock of capital is increase.


Depreciation refers to the decrease in the value of fixed capital due to (normal wear and tear) and (accidental loss) in an accounting year.

Expected Obsolescence

Like change in technology, change in demand Example- a plant making Black and White T.V becomes obsolete when Color T.V is discovered

Unexpected Obsolescence

1) such as floods, natural calamities, earthquakes and fires

2) Decline in the market value of assets due to economic slowdown

Household Sector

It includes consumers of goods and services

Producers Sector

It includes all the producing units (firms) of the economy.

Government Sector

The government is involved as an agency and as a producer to do welfare work.

Emergence of Macroeconomics

Macroeconomics emerged as a separate branch after the publication of the famous book The Journal Theory of Employment, Interest and Money by British economist John Maynard Keynes in 1936. After that the Great Depression of 1929 and in the years after that it was seen that there was a great decline in the levels of employment in the countries of Europe and North America, it also affected other countries of the world. There was little demand for goods in the market and factories were lying idle. Workers were fired. In the United States from 1929 to 1933, the unemployment rate rose from 3% to 25%. These events inspired economists to think about the working of the economy in new ways, thus the emergence of a subject like macroeconomics.

Reference to the current book on Macroeconomics

So in this we will know about the capitalist economy, the definition of capitalist economy is as follows

1) There is private ownership of the means of production

2) Capitalist countries came into existence during the last three to four hundred years, even today only a few countries of North America, Europe and Asia come under the category of capitalist countries. The production units in this book are called firms.

3) Their main objective is to produce goods and services and sell them in the market and earn maximum profit from them.

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