Microeconomics
Candlefocus EditorMicroeconomics studies the same basic principles of economics – how resources are used for exchange and consumption, and the factors that affect the demand for goods and services. In contrast to macroeconomics which studies the entire economy on an aggregate level, microeconomics looks at issues from a more individualistic, localized view. Microeconomics focuses on the production cost of goods and services, examines consumer and producer needs, and studies supply and demand through the analysis of individual markets. The aim is to understand how society efficiently allocates resources and distributes goods and services, and how agents interact within the markets.
Microeconomists rely on multiple theories and models to formulate their research. These models are built on assumption and manipulated accordingly. These models attempt to get as close as possible to replicating real-world, micro economic phenomenon. They may be based on historical facts, or on recent statistics or data. After an initial analysis, the models are then tested against current economic conditions. This helps economists to decide when something needs to be changed or when something needs to be monitored.
In conclusion, microeconomics is an important component of economics as it studies how and why individuals and firms make decisions in regards to resource allocation. It looks at markets on an individual level, examining supply and demand and the production costs of goods and services. Microeconomics examines consumer and producer needs and provides a specialized insight into the economy. It also uses several theories and models that help it to understand observed behavior and make predictions for the future.