now lets look at economics we have looked
at the definition now let us look at the what
do we study in economics we all know that
we study market in economics why do we study
market the reason that we study market is
that this is probably one of the most prevalent
form of most prevalent mechanism to allocate
resources 
what is to be studied in economics we study
political process you may some of you may
be wondering why do we study political process
in economics wouldnt it be a topic in political
science it is
but it is also a topic in economics the reason
is we study political process because political
process affect a allocation mechanism ok it
affects through taxation through aggregation
of preferences these terms if it is not clear
to you do not worry about it as we progress
in this course you would learn these terms
so but the thing is the political process
affects the allocation mechanism namely here
market thats why we study political process
in economics we study lets say crime in something
called law and economics why do we study it
shouldnt it be a topic of law it is a topic
of in law
but also we study a particular aspect of crime
here in economics for example lets say theft
its illegal mean of allocating resources but
nevertheless it is mean of allocating resources
thats why we study it in law and economics
similarly there are so many branches i can
go on saying lets take one or two more and
then as you progress you would learn about
different topics in economics what we have
labour economics labour as we have seen is
one of the most important resources ok so
thats why we study in economics we have urban
economics 
here we talk about city how the origin of
urban life how how does urban economy work
so why do we study here urban economics in
economics because again urban agglomeration
are nothing but to it helps a allocation of
resources thats why we study urban economics
in economics
so now lets rather than going one by one through
different fields of economics lets look at
the broad fields of economics what are these
broad fields we can say that it has three
main branches the first is microeconomics
thats what we are supposed to study in this
course then we have macroeconomics and third
is statistics or let me use the specific name
that we economists use its not exactly statistics
but what we have here is econometrics 
now lets pay attention to this world micro
its coming from greek word micros which means
small and here its macro macros the word here
the greek word here is macros and it means
large and here metrics it relates to measurement
ok so here in microeconomics we study economic
behavior of individuals so economic behavior
of 
in macro economics we study economy as a whole
an entire economy we study the economic question
pertaining to entire economy so let me write
here entire economy ok so let me just first
concentrate on micro economics as well as
on macro economics
so here the kind of question that we talk
about when two individuals are interacting
or when a group of individuals are interacting
our decision units are always one individual
we always talk about one how an individual
has reached to this particular decision and
if we are handling question in this particular
fashion then we are talking about a topic
in microeconomics but when we have we are
aggregating the whole economy we are not talking
about individuals interaction we are talking
about how the whole economy is performing
then we are talking about a topic in macroeconomics
for example unemployment is about its not
a micro its not about one individual its about
the whole economy how the whole economy is
performing so unemployment is of course studied
in macroeconomics similarly if you look at
inflation by the way what is inflation inflation
higher inflation means higher price rise its
its a concept that relates to price overall
level of price rise in economy so when we
are talking about to inflation we study it
in macroeconomics when we are talking about
the national income then we are talking about
macroeconomics how about here when two forms
are interacting or when consumer is when a
consumer a consumer is buying some product
then we consider those questions in microeconomics
lets now talk about econometrics i already
told you that here you can clearly say this
is coming from economics and this is coming
from metrics its here it means measurement
measurement of economic variable thats the
broad name but what do we mean by econometrics
econometrics is basically a quantitative set
of tools to analyze the economic problems
on the basis of joint development of economic
theory and facts observed in real world ok
so when we are talking about econometrics
we are talking about a quantitative sets of
a quantitative set of tools to analyze an
economic problem and how do we analyze we
bring economic theory as well as the data
that we collect from the real world together
using the data using some statistics tool
ok we form some statistic we bring in statistics
tools economic theory together and thats how
we get econometric principle we collect data
we bring these things together using the data
we verify our econometric model and thats
why we have econometrics is very very important
branch of economics it helps us verify the
theory developed in micro and macroeconomics
so although we are not going to talk about
econometrics more in this course but the bottom
line is that econometrics is used to verify
to test micro economic as well as macroeconomic
theories so one can say here let us look at
it one other way to describe economics is
it has two we can say one is theory and second
is empirical tool and even in theory we have
two branches microeconomics and here we have
macroeconomics and similarly we can have here
two branches microeconomics and macro in short
so we can say these two are related microeconomics
in theory and microeconomics in empirical
tool they are related here we are developing
some theory here we are developing some empirical
tool to test theory developed here similarly
the same thing is true for macroeconomics
so here these this part belong to econometrics
