Before we talk about the examples of microeconomics let us see what microeconomics actually is. Economics is divided into two study areas, macroeconomics and microeconomics. Microeconomics takes into consideration the smaller picture. It concentrates on the basic concepts of demand and supply and the factors that influence the decisions of individual businessmen when it comes to how much to produce as well as what to charge. Those who are desirous of starting a business of their own or wish to know more about the rationale regarding the pricing of certain services and products should know more about microeconomics.
Microeconomics is a branch of economics that takes into account the market behavior of firms as well as individual consumers so that the economist is able to understand the process of decision-making of households and firms. It looks into the interaction between sellers and buyers in their individual capacity. It is also concerned about the factors that might affect the choice that is made by the sellers and buyers. Microeconomics observes the patterns of demand and supply. It determines the output and price in individual markets like say, the coffee industry. The examples of microeconomics are industrial activities, business firms and households. This branch of economics studies how individual sections of the economy like firms and households make decisions regarding the allocation of limited resources, especially in markets where services or goods are being sold and bought. It examines how such behaviors and decisions affect the demand and supply for services and goods. This in turn determines the prices. The prices influence the demand and supply of services and goods. The goal of this branch of economics is to analyze the mechanisms of the market that establish relative prices of services and goods and allocation of the limited resources in the midst of numerous alternative uses. It also analyses the reasons behind market failure when markets are not able to produce the desired results. It describes the conditions in theory that are required for perfect competition. The vital fields of study in this period include applications in economy of the game theory, the choices that are made when the conditions are uncertain, markets that are under information that is asymmetric and general equilibrium.
Macroeconomics is the exact opposite of microeconomics. It looks into the sum total of the economic activity. It considers the issues of unemployment, inflation and growth. Micro economics is also concerned with the effects of the policies of the national economy like the changing levels of taxation. Most of the modern theory of microeconomics is based on micro-foundations which are the basic assumptions of behavior at the micro-level.
Examples of microeconomics would provide answers to questions like how the change in the price of a particular good would influence the purchasing decision of a family or if your wages rose, would you be inclined to work less hours or more hours?
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