Microeconomics is a field of study in social science that implies individual human activities. It also indicates how specifically these decisions are taken. It further provides an analysis of decisions that could affect the usage and distribution of rare resources.
It shows that different goods have different values and that any individual can make better and pooled results. This could be achieved if they form a good team and cooperate in establishing a definite goal. Thus, it could be said that microeconomics provides a complete and compact knowledge of science than macroeconomics.
Uses of Microeconomics
There are various uses of microeconomics. Microeconomics does not explain what is exactly going on in the market. Instead, it tries to explain what is needed to expect if there are specific changes. For example, if a manufacturer increases the price of a car, microeconomics’ policy prefers buying less number of vehicles.
Microeconomics also helps the investor see what happens in a sudden declination of stock prices could result in less buying of the particular product. It even further explains the importance and usage of a minimum wage is.
Methods of Microeconomics
The next part of the discussion about microeconomics is about its methodology. Various methods are being adapted for microeconomics. One of the ways in microeconomics is neoclassical microeconomics. Whenever it comes to the positivists, they believe in measurable economic events and evidence to test which events work at their best.
They also believe that there is no need for a repetition of any tests. Neoclassical economists believe in making simple assumptions for the development of their work. They think that if any problems arise, it would be better at simplifying them. A simple approach helps in getting a better result.
There could be another method that can be used here. This method is known as logical deduction and using twin principles. This focuses on economic incentives rather than a mixed approach.
Concepts of Microeconomics
Various concepts of microeconomics can be deployed in the field of finance. Ideas like this are widely used in different financial sectors. Most economists follow these concepts to give a fruitful result.
- We are maintaining the equilibrium in demand and supply.
- Theory-based on production
- The costs of the production
- Labor Economics: