Microeconomics
From Economypedia.com
Microeconomics is a division of economics, which studies the ways by which individuals, firms and families take decisions regarding allocation of the limited amount of resources at their disposal. The studies are done in a context of markets where goods and services are traded.
Microeconomics also deals with the various ways in which the various economic decisions taken by individuals, companies and families have an impact on demand and supply of services and goods in a particular market. Furthermore, microeconomics also deals with the impact of movements in demand and supply of goods and services on their prices and how the prices affect supply and demand of goods and services. One of the basic aims of microeconomics is to examine the various market mechanisms that play a role in the determination of relative prices of the goods and services that are available in a particular market.
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Important Fields of Study for Microeconomics
Microeconomics also studies market failures like cases where markets perform below par. It also provides description of the theoretical conditions that are necessary in the context of perfect competition. Some of the important fields of study of microeconomics are as follows:
- General equilibrium
- Markets under asymmetric information
- Choice under uncertainty
- Economic applications of game theory
Difference with Macroeconomics
The difference between microeconomics and macroeconomics lies in the fact that macroeconomics studies the performance, behavior and structure of the economy of a nation or a geographical region compared to microeconomics whose scope is limited to families, companies and individuals.
Macroeconomics, in contrast to microeconomics, deals with the aggregate economic activity. It looks at issues like growth, unemployment and inflation. Macroeconomics also studies the role played by national economic policies vis-a-vis these areas. The impact that governmental policies, like taxation policies for example, have on economic growth, unemployment and inflation of a country also come under the purview of macroeconomics.
Applications of Microeconomics
In the following, microeconomics is applied:
- Industrial organization and regulation
- Health economics
- Law and economics
- Country-specific economics
- Labor economics
- Financial economics
- Business economics
- Public finance
- Economic history
- Economic policy
- Economic theories
- Technomics
See also
- Economics
- Macroeconomics
- Economy
- Global economy
- World economy
- Free market economy
- Open economy
- Mixed economy
- Command economy
- Closed economy
- Planned economy
- Market economy
- Economics
- Macroeconomics
- Microeconomics
- Overheated economy
- Black economy
- Gray economy
- Digital economy
- Virtual economy
- Knowledge economy
- Knowledge-based economy
- New economy
- Hydrogen economy
- Low-carbon economy
- Fuel economy
- Economies of scale
- Diseconomies of scale
- Economy of high wages
Further reading
- Blog on microeconomics
- James D. Miller blog on his book on microeconomics
- Investopedia entry on microeconomics
