Microeconomics is a branch of economics focusing on the behavior of individual market participants and their interactions.
Studies how individuals make decisions about resources, goods, and services.
Concerned with the functioning of individual markets, including consumers and producers.
Branches of Microeconomics
Microeconomic Theory
Examines behavior of individual agents in a market.
Focuses on the impact of prices on decision-making.
Applied Microeconomics
Applies theoretical knowledge to analyze real-world market functioning.
Contrast with Macroeconomics
Macroeconomics deals with the aggregate behavior of all markets in an economy.
Focuses on inflation, unemployment, GDP, etc.
Basic Concepts in Microeconomics
Demand: The quantity of a good or service that consumers are willing and able to purchase at various prices.
Supply: The quantity of a good or service that producers are willing and able to offer for sale at different prices.
Elasticity: Measures how demand for a good or service changes in response to a change in its price.
Market Equilibrium: A state where supply equals demand, indicating no inherent pressure for price changes unless external factors affect supply or demand.
Applications of Microeconomics
Explains disparity in wealth among individuals.
Analyzes why some countries experience faster economic growth.
Evaluates the impact of government policies on household budgets.
Relevant in fields like health, education, development, public policy, business management, marketing, and finance.
Conclusion
Microeconomics is crucial for understanding economic decision-making at the individual and industry levels.
Provides frameworks for making choices with limited resources and understanding production possibilities.