Some Questions About Microeconomics!!!!
What Is Microeconomics? How I Would Define It
Roughly speaking, microeconomics deals with economics decisions made at a low, or micro, level. More precisely, I would define microeconomics as "the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions effect others". Microeconomics decisions by both firms and individuals are motivated by cost and benefit considerations. Costs can be either in terms of financial costs such as average fixed costs and total variable costs or they can be in terms of opportunity costs, which consider alternatives foregone. Microeconomists consider questions such as "What determines how much a consumer will save?", "How much should a firm produce, given the strategies their competitors are using" and "Why do people buy both insurance and lottery tickets? What is Microeconomics? - How Others Define Microeconomics Like most definitions in economics, there are various competing definitions of the term Microeconomics. Browsing the web, we will find various answers to the question: The Economist's Dictionary of Economics defines Microeconomics as "The study of economics at the level of individual consumers, groups of consumers, or firms... The general concern of microeconomics is the efficient allocation of scarce resources between alternative uses but more specifically it involves the determination of price through the optimizing behaviour of economic agents, with consumers maximizing utility and firms maximizing profit." Example of a Microeconomic Question How does the change of a price of good influence a family's purchasing decisions? If my wages rise, will I be inclined to work more hours or less hours? Contrast this with Macroeconomics, which deals with questions of a large scope, such as how does a change in interest rates influence national savings? |
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