Meaning of Microeconomics-
There are basically two branches of Economics - Microeconomics and Macroeconomics.
The word Microeconomics is derived from the Greek word 'Mikros' which means 'Small'.
Microeconomics is the branch of economics, which studies the behaviour of individual economic units like an individual buyer, individual seller, etc. Microeconomics deals with the study of economic issues related to such individual economic units.
Under Microeconomics, we split the economy into small individual units and then study each individual unit separately.
Following are the features of microeconomics:
1. Study of Individual Units - Micro Economics deals with the study of individual units of an economy like an individual consumer, individual producer etc.
2. Slicing Method - Study of microeconomics uses slicing method as under microeconomics, the whole economy is broken down into small individual units for the purpose of studying them individually
3. Price Theory - Micro Economics is referred to as price theory as it basically focuses on the determination of prices of various goods and also the prices of factors of production (land, labour, capital and enterprise are four factors of production)
4. Partial Equilibrium - Micro Economics deals with partial equilibrium analysis as it analyses the equilibrium position of individuals (individual consumer, individual industry etc.). Partial equilibrium analysis isolates an individual unit from other forces of the economy, thereby neglecting the impact of other forces on the individual units
5. Use of Marginalism - Micro Economics makes use of the principle of marginalism for the purpose of analysis. Marginal means change brought about in total by an additional unit. For example, marginal cost means an increase in total cost by producing one more unit of the product. The concept of Margin is used in all the areas of microeconomics
6. Based on Assumptions - Micro Economic theories make use of a lot of assumptions. Most theories are based on the assumption "other things being constant" (ceteries paribus assumption).
7. Analysis of Market Structures - Under microeconomics, we study different market structures like monopoly, oligopoly, perfect competition, etc. We study the behaviour of various individual units in these different forms of market structures
8. Microscopic Approach - Micro Economics uses a microscopic approach. Study of individual units as part of the whole economy is similar to the study of different cells (using a microscope) as parts of the whole body of an organism.
Also refer - Demand: Individual Demand and Market Demand
There are basically two branches of Economics - Microeconomics and Macroeconomics.
The word Microeconomics is derived from the Greek word 'Mikros' which means 'Small'.
Microeconomics is the branch of economics, which studies the behaviour of individual economic units like an individual buyer, individual seller, etc. Microeconomics deals with the study of economic issues related to such individual economic units.
Under Microeconomics, we split the economy into small individual units and then study each individual unit separately.
Following are the features of microeconomics:
1. Study of Individual Units - Micro Economics deals with the study of individual units of an economy like an individual consumer, individual producer etc.
2. Slicing Method - Study of microeconomics uses slicing method as under microeconomics, the whole economy is broken down into small individual units for the purpose of studying them individually
3. Price Theory - Micro Economics is referred to as price theory as it basically focuses on the determination of prices of various goods and also the prices of factors of production (land, labour, capital and enterprise are four factors of production)
4. Partial Equilibrium - Micro Economics deals with partial equilibrium analysis as it analyses the equilibrium position of individuals (individual consumer, individual industry etc.). Partial equilibrium analysis isolates an individual unit from other forces of the economy, thereby neglecting the impact of other forces on the individual units
5. Use of Marginalism - Micro Economics makes use of the principle of marginalism for the purpose of analysis. Marginal means change brought about in total by an additional unit. For example, marginal cost means an increase in total cost by producing one more unit of the product. The concept of Margin is used in all the areas of microeconomics
6. Based on Assumptions - Micro Economic theories make use of a lot of assumptions. Most theories are based on the assumption "other things being constant" (ceteries paribus assumption).
7. Analysis of Market Structures - Under microeconomics, we study different market structures like monopoly, oligopoly, perfect competition, etc. We study the behaviour of various individual units in these different forms of market structures
8. Microscopic Approach - Micro Economics uses a microscopic approach. Study of individual units as part of the whole economy is similar to the study of different cells (using a microscope) as parts of the whole body of an organism.
Also refer - Demand: Individual Demand and Market Demand
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