Economics: Theory and Practice, 10th Edition

CHAPTER 10

Households and Businesses: An Overview

CHAPTER OBJECTIVES

To provide a fundamental overview of households and businesses.

To introduce sources and sizes of household income and types of household expenditures.

To define the basic objective of economic decision making by individuals.

To introduce the balancing process involved in an individual's spending and earning decisions.

To identify the legal forms of business, and to discuss business ownership of other businesses.

To discuss the goal of profit maximization or loss minimization in business decision making, and to explore some questions about this goal.

This chapter begins the study of microeconomics. While microeconomics and macroeconomics are the two major divisions in studying the field and share the common language and model-building techniques of economics, their focus is quite different. Macroeconomics looks at the total economy and how it functions, and studies the economic behavior of groups such as households, businesses, and government units. Microeconomics looks at decision making and how it influences the behavior of individuals in households and businesses.

Microeconomics The study of individual decision making units and markets within the economy.

This chapter is designed to give you background information about households and businesses before we do an in-depth study of microeconomic concepts. ...