Microeconomics is a branch of economics focusing on individual economic actors. It differs from macroeconomics, another branch of economics. The latter studies the behavior and interactions of economic agents in the aggregate. It focuses on overall economic performance.
Microeconomics gives you insight into what are the goals of consumers and producers. How do they decide to allocate resources? How do they maximize profit and satisfaction? How do they interact in the market? Economists also explain how external intervention, such as the government, affects the outcome of the market.
Demand, supply, price, and market are the main topics. Economists then detail how demand and supply arise. How do they produce the best results for consumers and producers? And what if the results do not match the ideal model?
Why is Microeconomics Important?
Microeconomics knowledge is helpful in our daily life. If you are a marketer, it helps you set the right price to maximize profits.
If you are an investor, microeconomics helps you assess the effectiveness of a company’s strategy. For example, suppose you want to determine whether a company can increase revenue by cutting prices. What will happen to the requests? Will the company sell for more, more than the price cut percentage?
Topics on Microeconomics
- Arc Elasticity
- Complementary Goods
- Concentration Ratio
- Conspicuous Consumption
- Consumer Choice Theory
- Cournot Model
- Deadweight Loss
- Diseconomies of Scale
- Economic Profit
- Economies of Scale
- Elasticity of Demand
- Excess Demand
- Excess Supply
- Free Rider
- Government Intervention
- Herfindahl-Hirschman Index
- Imperfect Competition
- Income Effect
- Income elasticity of demand
- Inferior Goods
- Luxury Goods
- Marginal Product
- Market Equilibrium
- Market Failure
- Market Power
- Minimum Efficient Scale
- Monopoly Power
- Nash Equilibrium
- Normal Goods
- Own-Price Elasticity of Demand
- Perfect Competition
- Price Ceiling
- Price Discrimination
- Price Taker
- Substitute Goods
- Substitution Effect
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