Answers To The Question: What is Microeconomics
Microeconomics – In this article we will learn about microeconomics, what it is, and how it is applied.
What is microeconomics? Well, for the most part, it is a social science concerned with the implication of human action. More specifically, how those actions affects utilization and distribution of scarce resources.
With this, one is able to reveal how and why goods have different values. It also shows have individuals make more systematic decisions.
So with this, we could say that Microeconomics is an advanced and more broader study than macroeconomics. Macroeconomics would be the study of economics on a much larger scale.
Microeconomics also apply mathematics to formulate theories and observational studies. This then allows microeconomists to test their theories in the real world.
Aside from studying the effects of an individuals action, it also studies factors of production change. With this, individual actors are often collected into microeconomic subgroups.
These groups would include buyers, sellers, as well as owners of business. The subgroups then create a chain of supply and demand for resources.
According to investopedia, money and interest rates are also used as a pricing mechanism. These factors help out in coordination withing the subgroups.
What are the uses of microeconomics? In retrospect, microeconomics is not concerned with what should happen in the market.
It instead focuses on what to expect given certain changes within the market. This deals mostly with the law of supply and demand.
For example, if a certain car company raises the price of their cars, the study would tell you consumers will buy fewer than before. As with the law of supply and demand.
The study also has its basic concepts. These concepts serve as its foundations.
These would include:
- Production theory
- Utility Theory
- Price Theory
- Industrial organization and market structure
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