Microeconomics is a largest subfield of economics which is a study of economic behavior of small economic groups. Everything can be seen from two different pictures, big and small or macro and micro. Macro is a wide-angle lens to look at the thin gs and micro is a narrow-focus len
s. Economics has two further fields, macroeconomics and microeconomics.
What is microeconomics?
Microeconomics focuses on the role of consumer and business in economy. It specifically pays attention to the decision making of these groups. These decisions can be that when consumer purchases the goods and how much he will pay for the good.
It can also be the prices of the goods determine by the business that how much business is going to charge for its product. Microeconomics is a study of the smaller units of the whole economy. The study of microeconomics is based on the terms of “supply” and “demand”.
Definition of microeconomics:
I have described microeconomics but now we are going to describe that how others define microeconomics. There are so many definitions of microeconomics on web. We can find from any search engine. But the most appropriate definition of microeconomics is by the economists Dictionary of Economics:
“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 behavior of economic agents, with consumers maximizing utility and firms maximizing profit.”Microeconomics has following subfields:
Rational behavior: Individuals make decisions on utility based theory. The decision that is made by the individuals is considered as the most satisfactory for them. Rational behavior is also called rational decision making.
Businesses make decision according to their competitors in the market. If businesses are facing more competitions there is low scope in terms pricing for them.
Opportunity cost of consumers and individuals actions includes in their account at decision making time.
Examples of microeconomics questions:
How a change in good’s price effects a family’s purchasing decision?
How national savings can be affected by interest rates change?
If the pay of a worker will rise, he will work for more hours or less?
These questions can be asked by your teacher in microeconomics section. Sometimes the question of microeconomics is somehow, relates to the macroeconomics. Like second question requires contrast with macroeconomics that deal with the query of large scope.