Microeconomics - Pregnant Ambit Features Uses Limitations

Study of Economics - Micro & Macro Economics

The report of economic science is divided past times the modern economists into 2 parts viz. Micro economics as well as Macro economics. This sectionalization is shown inwards the figure / nautical chart above. Micro economic science as well as Macro economics, both the terms were used inwards 1933 past times Prof. Ragnar Frisch from Oslo University of Norway.

The discussion micro has been derived from the Greek discussion `Mikros' i.e. minor as well as the discussion macro has been derived from Greek discussion `Makros' i.e. large.

What is Microeconomics ? Meaning & Definition

Micro way small. Thus, micro economic science analyses individualistic behaviour. It studies an private consumer, producer, toll of a particular commodity, household, etc.

According to Prof. K. E. Boulding, "Micro Economics is the report of particular firm, particular household, private prices, wages, incomes, private industries as well as particular commodities."

Subject Matter or Scope of Microeconomics

Micro Economics is concerned alongside the next topics :-

1. Commodity Pricing

Prices of private commodities are determined past times marketplace lay forces of demand as well as supply. So micro economic science makes demand analysis (individual consumer behaviour) as well as provide analysis (individual producer behaviour).

2. Factor Pricing

Land, labour, upper-case missive of the alphabet as well as entrepreneur, all factors contribute inwards production process. So they teach rewards inwards the shape of rent, wages, involvement as well as lucre respectively. Micro economic science deals alongside determination of such rewards i.e. component prices. So micro economic science is likewise called equally 'Price Theory' or 'Value Theory'.

3. Welfare Theory

Micro economic science deals alongside optimum resources allotment of available resources as well as maximisation of social welfare. It provides answers for 'What to produce?', 'When to produce?', 'How to produce?' as well as 'For whom it is to live on produced?'. In short, Micro economic science guides for utilizing scarce resources of economic scheme to maximize world welfare.

Characteristics / Features of Microeconomics

Classical economists ever insisted on micro economic science because they believed that it is ameliorate to empathize concept at private grade as well as thence teach for full general (or macro) level. E.g. get-go agreement private consumer demeanour as well as thence analyzing the demeanour of entire market.

1. Nature of Analysis

In micro economics, the demeanour of private consumers as well as producers inwards particular is analysed. It is report of dependent area affair from particular to general.

2. Method

Micro economic science divides the economic scheme into diverse minor units as well as every unit of measurement is analysed inwards detail. It is a slicing method.

3. Scope

Micro economical analysis involves production pricing, component pricing as well as theory of welfare.

4. Application

Both theoretically as well as practically, micro economic science is useful inwards formulating diverse policies, resources allocation, world finance, international trade, etc.

5. Nature of Assumptions

Assumption of Ceteris Paribus is ever made inwards every micro economical theory. It way theory is applicable alone when 'other things beingness same'.

Uses / Importance / Advantages of Microeconomics

1. Individual Behaviour Analysis

Micro economic science studies demeanour of private consumer or producer inwards a particular situation.

2. Resource Allocation

Resources are already scare i.e less inwards quantity. Micro economic science helps inwards proper resources allotment as well as utilization of resources to create diverse types of goods as well as services.

3. Price Mechanization

Micro economic science decides prices of diverse goods as well as services on the terra firma of 'Demand-Supply Analysis'.

4. Economic Policy

Micro economic science helps inwards formulating diverse economical policies as well as economical plans to promote all circular economical development.

5. Free Enterprise Economy

Micro economic science explicate operating of a gratis enterprise economic scheme where private has liberty to accept his ain economical decisions.

6. Public Finance

It helps the authorities inwards fixing the taxation charge per unit of measurement as well as the type of taxation equally good equally the amount of taxation to live on charged to the buyer as well as the seller.

7. Foreign Trade

It helps inwards explaining as well as fixing international merchandise as well as tariff rules, causes of disequilibrium inwards BOP, effects of factors deciding telephone substitution rate, etc.

8. Social Welfare

It non alone analyse economical weather merely likewise studies the social needs nether dissimilar marketplace lay weather similar monopoly, oligopoly, etc.

Disadvantages / Limitations of Microeconomics

1. Unrealistic Assumptions

Micro economic science is based on unrealistic assumptions, particularly inwards illustration of total job supposition which does non be practically. Even demeanour of ane private tin post away non live on generalised equally the demeanour of all.

2. Inadequate Data

Micro economic science is based on the information dealing alongside private behaviour, private customers. Hence, it is hard to teach right information. So because of wrong information Micro Economics may provide inaccurate results.

3. Ceteris Paribus

It assumes that all other things beingness equal (same) merely truly it is non so.

Glance on Notes of Microeconomics

1. Micro economic science is that branch of economic science which studies individualistic behaviour. It concentrates on private consumer, producer, toll of a particular commodity, household, etc.
2. The discussion micro has been derived from a Greek discussion 'Mikros' i.e. Small.
3. The concept of 'Micro Economics' was introduced past times Prof. Ragnar Frisch as well as was developed past times doctor Alfred Marshall.
4. Micro economic science mainly concentrates on commodity pricing, component pricing as well as economical welfare.
5. It is the 'Slicing Method' which divides the economic scheme into diverse minor units as well as every unit of measurement is analysed inwards detail.
6. It indicates the partial equilibrium analysis.
7. It is based on 'Ceteris Paribus' assumption.