WHAT IS MICROECONOMICS? 

Microeconomics is derived from the Greek word ‘mikros’ which means small. Microeconomics is a branch of economics that deals with small or individual units such as individual persons, firms, industries, and households.

DEFINITIONS:

    According to Maurice “microeconomics is in fact a microscopic study of the economy.”

FEATURES OF MICROECONOMICS:

1) Study of individuals: microeconomics is a study of the behaviour of small individuals like households, firms, individual people, and industry.

2) Determination of price: microeconomics deals with the determination of the price of commodities as well as factors of production like capital, land, entrepreneur, and labour.

3) Microeconomics is based on certain assumptions: while dealing with various theories microeconomics assumes certain variables are constant for example, perfect competition or full employment of factors.

4) Slicing method: microeconomics slices large parts into small parts and studies that part very deeply. For example research of individual income out of the whole population.

5) Marginalism principle: microeconomics uses the marginalism principle while studying policies. Marginalism or marginal means a change brought in total output by additional units. Marginalism helps sellers and consumers to make economic decisions.

6) Analysis of market structures: microeconomics analyzes different market structures such as monopolistic market, perfect market, oligopoly market, or monopoly market.

7) Limited scope: scope of the microeconomic study is limited to only individual units. It does not study nationwide problems occurring in an economy such as unemployment, inflation, etc