What Is Microeconomics

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What Is Microeconomics
What Is Microeconomics

Video: What Is Microeconomics

Video: What is Microeconomics - Professor Ryan 2022, December

Microeconomics is a science that studies the behavior of individuals in the process of their interaction in the market. A whole market system is built on the principles of microeconomics, which makes it possible to characterize market participants from the supply and demand side.

What is microeconomics
What is microeconomics


Step 1

Within the framework of microeconomics, an individual or household is studied, participating in economic relations. Microeconomics examines all possible motives for the behavior of a given individual in the market, which forced him to make one or another decision regarding a given product. It reveals how much the individual is independent in his choice.

Step 2

Microeconomics considers a group of individuals united by a common production activity. An example is an enterprise that carries out a certain type of activity. In this case, microeconomics, studying market relations between employees of a given enterprise, takes into account not the totality of individuals working in isolation, but the enterprise itself, studying its behavior in this market. And here production appears as a single whole.

Step 3

The theory of microeconomics also includes the theory of markets for goods and services. Relations in the markets are built through the participation of producers and consumers, the latter acting as individuals. Microeconomics approaches market research from two angles. On the one hand, the market acts as an integral system with independent supply and demand. On the other hand, the market is presented as a system of interrelated elements (participants) with interdependent interests that influence the formation of supply and demand.

Step 4

Microeconomics studies the markets for factors of production, raw materials and resources. Since pricing in the markets of goods and services is extremely important for microeconomics, it is also important for it to generate consumer incomes, which are directly related to the principles of the formation of factor prices, as well as the laws of income distribution by factors of production.

Step 5

Investigating the theory of individual markets, macroeconomics thereby evaluates the economic equilibrium as a whole, making up the ratio of global proportions.

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