what is micro economics essay

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Microeconomics

Unit 1: basic economic concepts, unit 2: supply, demand, and market equilibrium, unit 3: elasticity, unit 4: consumer and producer surplus, market interventions, and international trade, unit 5: consumer theory, unit 6: production decisions and economic profit, unit 7: forms of competition, unit 8: factor markets, unit 9: market failure and the role of government.

What is Microeconomics Essay And How to Write it With Perfection

Most of the students are still not aware of how to write microeconomics essay. That is why the students always finding it difficult to write their essay on microeconomics. Here in this blog we are going to help you to find out the best ever tips on how to write a microeconomics essay with perfection. But before we start, let’s have a look on what is microeconomics.

What is Microeconomics?

Table of Contents

Macroeconomics is the study of how a large-scale economy works. It is concerned with economics at the regional, national, and global levels. 

Inflation, GDP, unemployment rates, investment, national income, consumption, production, international finance. And international commerce are some of the themes in macroeconomics.

Tips Before Writing a Microeconomics Essay

Macroeconomics is one such subject that is not enjoyed by everyone. Only a few people enjoy this subject. But many of us are not in those few people. In such situations, doing an assignment in the same subject is quite a task for us. However, in this guide, we tried to bring you everything possible that you might need to know before writing a macroeconomics essay. Below are the tips that should consider before instantly starting to write:

Decide Topic

First, decide the field and the topic you want to write about.

Before jumping into writing. You should gather all the possible information about your topic using the internet, books, or any other type of sources. And you can even make notes of important points you want to add to your essay.

THE PURPOSE OF THE ESSAY. While you search for the information. Try looking for the purpose of the essay too. You have to consider answering questions like; what are you trying to convey with this essay?

Answer Keywords

Always answer keywords like ‘why’, ‘when’, and ‘what’.

Information

You need to give complete details about the subject. You need to give “causes and effects”, “arguments” and “related-information”.

Draw an Outline

It’s better to make an outline to give a structure to your essay. It helps you locate facts, necessary information, and data perfectly. From the introduction to the main body to the conclusion. Your outline should have it all. The introduction and conclusion of one paragraph and the main body is generally three paragraphs long.

Size of Different Parts of Essay

The introduction should not be too long but at the same, it should be catchy. Make sure it is not more than 25% of the essay. The same ratio is for the conclusion. And ensure that you don’t add anything new in the conclusion and summarize everything in it properly. The rest of 50% is for the main body. The main argument and problems and solutions should be included in it. 

• Top 50+ economics essay topics
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Before you jump into the structure directly. Make sure that you understand the topic entirely. After doing the proper research, arrange your material and start planning to write. Economic essay themes are frequently posed as questions. As soon as you’ve decided on a topic, read it through numerous times to ensure that you grasp it completely. If you have any questions, don’t be afraid to consult your professor for clarification. Once you’re sure that you’re right grasped the question. Write it down on a piece of paper

The ideal essay outline structure followed by most of the economists is 

Introduction- 1 Paragraph

Main Body- 3 Paragraphs

Conclusion- 1 Paragraph

Introduction

Once you have collected the information and data about your matter. You can now proceed with writing the essay. Starting any piece of writing is ordinarily more difficult for most people than writing the whole essay. The introduction should be catchy and it should make the reader curious about the subject. It should set the foundation of the essay. The reader must know what he is going to know about. 

Now in this part, expand everything that you have discussed a bit about in the introduction paragraph. This part is for explanation, information, and arguments to make. As already said this part should be of three paragraphs. Every paragraph should have a different argument. 

The argument in every paragraph should be stated at first and be discussed further. And it should be supported by facts and theory. After you are done giving details, you should also include counter arguments. So that you do not miss out on anything. And after you discuss everything related to the argument. Conclude it with a reasonable result.

You can consider the main body paragraphs of your economic essay once you’ve completed the main body paragraphs. It does not, however, imply that you can rest and anticipate any conclusion you come up with to fit your essay. The value of a strong conclusion in an article, particularly economic essays, cannot be overstated. A weak conclusion will leave your reader with the kind of impression you don’t want, as it is the part of your essay that adds the most to their overall opinion of your writing.

A conclusion can be thought of as a condensed version of your entire essay. When your reader has completed reading your paper and moved on to whatever else he or she has to do, this is what you leave them with. Restating your major argument that you offered in the introduction is a solid and established technique to end your essay. If you are still finding it difficult to understand then take our best economics essay writing help now.

Frequently Asked Questions

What are some interesting topics in macroeconomics.

Gross Domestic Product (GDP). Price ranges. The rate of inflation. Political economy Unemployment rates are high. Invest in development. Fiscal and monetary policies are both important. National and international trade are both important.

What are some basic tips to keep in mind?

Make sure you know exactly what you’re supposed to do. Extensive research. Make a plan. To back up your claim, include facts and instances. Once it’s finished, read it. Make sure there are no misspellings or grammatical problems

Difference between micro and macroeconomics?

Microeconomics focuses on how individuals and businesses make decisions, whereas macroeconomics focuses on how countries and governments make decisions. Microeconomics is a bottom-up approach that focuses on supply and demand, as well as other influences that influence price levels. Macroeconomics adopts a top-down perspective, examining the economy as a whole and attempting to predict its trajectory and nature. Microeconomics is a tool that investors can use to make investment decisions, whereas macroeconomics is an analytical instrument that is primarily used to formulate economic and fiscal policy.

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Browse Course Material

Course info.

• Prof. Jonathan Gruber

Departments

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• Microeconomics

Learning Resource Types

Principles of microeconomics, introduction to microeconomics.

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Session Overview

Keywords : Microeconomics; prices; normative economics; positive economics; microeconomic applications.

Session Activities

Before watching the lecture video, read the course textbook for an introduction to the material covered in this session:

• [R&T] Chapter 1, “Economics: The Study of Choice.”
• [ Perloff ] Chapter 1, “Introduction.” (optional)

Lecture Videos

• Download video
• Download transcript

Check Yourself

Concept quiz.

This concept quiz covers key vocabulary terms and also tests your intuitive understanding of the material covered in this session. Complete this quiz before moving on to the next session to make sure you understand the concepts required to solve the mathematical and graphical problems that are the basis of this course.

All three of these answers encapsulate the main theme of microeconomics in a different way: constrained optimization problems allow us to analyze how individuals and firms can make themselves as well off as possible given scarcity. This entails analyzing the trade-offs between investing in different activities.

Models do not provide a complete description of a particular economic phenomenon; instead, they make simplifying assumptions that render the model more tractable to work with. While empirical studies may make use of models, they are not identical.

Though it is accurate to say that firms maximize profits, it is incomplete. Individuals dont solely maximize income, rather utility, and sales and profits for a firm are not identical.

Both theoretical and empirical economics can analyze either individuals or firms, and either short-term or long-term phenomena.

This is a normative statement that is based on an assumption of equity (we want rich and poor to have equal access to treatment.) The others answers are positive statements that are based on facts about the supply and demand of goods in different markets.

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• What is ‘microeconomics’?
• Learn Arrow
• You, The Economist Arrow

Microeconomics zooms in on the specific decisions people and organisations make . How does a restaurant decide how much to charge for a bowl of soup? How do you decide between the soup and the steak? That’s microeconomics .

If the economy is just the end result of each of our daily actions, then a good place to start studying it is with individual decision making. As individuals we make loads of personal decisions every day - economists call us economic agents. Businesses, households, churches or charities could be economic agents too. Microeconomists take these decisions as their starting point, and then use concepts like supply and demand to understand how all these tiny parts piece together into the larger picture of the economy.

Rather than taking a magnifying glass out into the actual economy to see what’s really going on, microeconomists sometimes build models that can be used to analyze a variety of situations. Models are powerful tools that let economists tune out the noise and the complexity of the world and focus on what they really want to know . Supply and demand models reduce the world to simple decisions of buying and selling. By cutting out every other part of life and just looking at a single market transaction, supply and demand analysis makes it easier to see relationships that would otherwise be hidden.

Some accuracy is obviously lost in models, because much of the real world has to be ignored for a model to be simple enough to be of any use . Economists are constantly debating the usefulness of particular microeconomic models. Some economists support the method of making broad assumptions about human behavior and then logically following out the results of these assumptions to approximate the economy. Others are trying different approaches, like building behavioral models that incorporate insights from disciplines like psychology and sociology to achieve more accurate, albeit less simple, results.

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1.1 What Is Economics, and Why Is It Important?

Learning objectives.

By the end of this section, you will be able to:

• Discuss the importance of studying economics
• Explain the relationship between production and division of labor
• Evaluate the significance of scarcity

Economics is the study of how humans make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions. If you look around carefully, you will see that scarcity is a fact of life. Scarcity means that human wants for goods, services and resources exceed what is available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods and services we want but they exist in limited supply. Of course, the ultimate scarce resource is time- everyone, rich or poor, has just 24 expendable hours in the day to earn income to acquire goods and services, for leisure time, or for sleep. At any point in time, there is only a finite amount of resources available.

Think about it this way: In 2015 the labor force in the United States contained over 158 million workers, according to the U.S. Bureau of Labor Statistics. The total land area was 3,794,101 square miles. While these are certainly large numbers, they are not infinite. Because these resources are limited, so are the numbers of goods and services we produce with them. Combine this with the fact that human wants seem to be virtually infinite, and you can see why scarcity is a problem.

Introduction to FRED

Data is very important in economics because it describes and measures the issues and problems that economics seek to understand. A variety of government agencies publish economic and social data. For this course, we will generally use data from the St. Louis Federal Reserve Bank's FRED database. FRED is very user friendly. It allows you to display data in tables or charts, and you can easily download it into spreadsheet form if you want to use the data for other purposes. The FRED website includes data on nearly 400,000 domestic and international variables over time, in the following broad categories:

• Money, Banking & Finance
• Population, Employment, & Labor Markets (including Income Distribution)
• National Accounts (Gross Domestic Product & its components), Flow of Funds, and International Accounts
• Production & Business Activity (including Business Cycles)
• Prices & Inflation (including the Consumer Price Index, the Producer Price Index, and the Employment Cost Index)
• International Data from other nations
• U.S. Regional Data
• Academic Data (including Penn World Tables & NBER Macrohistory database)

For more information about how to use FRED, see the variety of videos on YouTube starting with this introduction.

If you still do not believe that scarcity is a problem, consider the following: Does everyone require food to eat? Does everyone need a decent place to live? Does everyone have access to healthcare? In every country in the world, there are people who are hungry, homeless (for example, those who call park benches their beds, as Figure 1.2 shows), and in need of healthcare, just to focus on a few critical goods and services. Why is this the case? It is because of scarcity. Let’s delve into the concept of scarcity a little deeper, because it is crucial to understanding economics.

The Problem of Scarcity

Think about all the things you consume: food, shelter, clothing, transportation, healthcare, and entertainment. How do you acquire those items? You do not produce them yourself. You buy them. How do you afford the things you buy? You work for pay. If you do not, someone else does on your behalf. Yet most of us never have enough income to buy all the things we want. This is because of scarcity. So how do we solve it?

Visit this website to read about how the United States is dealing with scarcity in resources.

Every society, at every level, must make choices about how to use its resources. Families must decide whether to spend their money on a new car or a fancy vacation. Towns must choose whether to put more of the budget into police and fire protection or into the school system. Nations must decide whether to devote more funds to national defense or to protecting the environment. In most cases, there just isn’t enough money in the budget to do everything. How do we use our limited resources the best way possible, that is, to obtain the most goods and services we can? There are a couple of options. First, we could each produce everything we each consume. Alternatively, we could each produce some of what we want to consume, and “trade” for the rest of what we want. Let’s explore these options. Why do we not each just produce all of the things we consume? Think back to pioneer days, when individuals knew how to do so much more than we do today, from building their homes, to growing their crops, to hunting for food, to repairing their equipment. Most of us do not know how to do all—or any—of those things, but it is not because we could not learn. Rather, we do not have to. The reason why is something called the division and specialization of labor , a production innovation first put forth by Adam Smith ( Figure 1.3 ) in his book, The Wealth of Nations .

The Division of and Specialization of Labor

The formal study of economics began when Adam Smith (1723–1790) published his famous book The Wealth of Nations in 1776. Many authors had written on economics in the centuries before Smith, but he was the first to address the subject in a comprehensive way. In the first chapter, Smith introduces the concept of division of labor , which means that the way one produces a good or service is divided into a number of tasks that different workers perform, instead of all the tasks being done by the same person.

To illustrate division of labor, Smith counted how many tasks went into making a pin: drawing out a piece of wire, cutting it to the right length, straightening it, putting a head on one end and a point on the other, and packaging pins for sale, to name just a few. Smith counted 18 distinct tasks that different people performed—all for a pin, believe it or not!

Modern businesses divide tasks as well. Even a relatively simple business like a restaurant divides the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located. A complex business like a large manufacturing factory, such as the shoe factory ( Figure 1.4 ), or a hospital can have hundreds of job classifications.

Why the Division of Labor Increases Production

When we divide and subdivide the tasks involved with producing a good or service, workers and businesses can produce a greater quantity of output. In his observations of pin factories, Smith noticed that one worker alone might make 20 pins in a day, but that a small business of 10 workers (some of whom would need to complete two or three of the 18 tasks involved with pin-making), could make 48,000 pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves? Smith offered three reasons.

First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage. (In later chapters, we will develop this idea by discussing comparative advantage .) People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents. Only those with medical degrees qualify to become doctors, for instance. For some goods, geography affects specialization. For example, it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more effective than if they produce a combination of things, some of which they are good at and some of which they are not.

Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better.

A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products (sometimes called its “ core competency ”) is more successful than firms that try to make a wide range of products.

Third, specialization allows businesses to take advantage of economies of scale , which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only 100 cars per year, each car will be quite expensive to make on average. However, if a factory produces 50,000 cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower. The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity.

Trade and Markets

Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need. In short, specialization requires trade.

You do not have to know anything about electronics or sound systems to play music—you just buy an iPod or MP3 player, download the music, and listen. You do not have to know anything about artificial fibers or the construction of sewing machines if you need a jacket—you just buy the jacket and wear it. You do not need to know anything about internal combustion engines to operate a car—you just get in and drive. Instead of trying to acquire all the knowledge and skills involved in producing all of the goods and services that you wish to consume, the market allows you to learn a specialized set of skills and then use the pay you receive to buy the goods and services you need or want. This is how our modern society has evolved into a strong economy.

Why Study Economics?

Now that you have an overview on what economics studies, let’s quickly discuss why you are right to study it. Economics is not primarily a collection of facts to memorize, although there are plenty of important concepts to learn. Instead, think of economics as a collection of questions to answer or puzzles to work. Most importantly, economics provides the tools to solve those puzzles.

Consider the complex and critical issue of education barriers on national and regional levels, which affect millions of people and result in widespread poverty and inequality. Governments, aid organizations, and wealthy individuals spend billions of dollars each year trying to address these issues. Nations announce the revitalization of their education programs; tech companies donate devices and infrastructure, and celebrities and charities build schools and sponsor students. Yet the problems remain, sometimes almost as pronounced as they were before the intervention. Why is that the case? In 2019, three economists—Esther Duflo, Abhijit Banerjee, and Michael Kremer—were awarded the Nobel Prize for their work to answer those questions. They worked diligently to break the widespread problems into smaller pieces, and experimented with small interventions to test success. The award citation credited their work with giving the world better tools and information to address poverty and improve education. Esther Duflo, who is the youngest person and second woman to win the Nobel Prize in Economics, said, "We believed that like the war on cancer, the war on poverty was not going to be won in one major battle, but in a series of small triumphs. . . . This work and the culture of learning that it fostered in governments has led to real improvement in the lives of hundreds of millions of poor people.”

As you can see, economics affects far more than business. For example:

• Virtually every major problem facing the world today, from global warming, to world poverty, to the conflicts in Syria, Afghanistan, and Somalia, has an economic dimension. If you are going to be part of solving those problems, you need to be able to understand them. Economics is crucial.
• It is hard to overstate the importance of economics to good citizenship. You need to be able to vote intelligently on budgets, regulations, and laws in general. When the U.S. government came close to a standstill at the end of 2012 due to the “fiscal cliff,” what were the issues? Did you know?
• A basic understanding of economics makes you a well-rounded thinker. When you read articles about economic issues, you will understand and be able to evaluate the writer’s argument. When you hear classmates, co-workers, or political candidates talking about economics, you will be able to distinguish between common sense and nonsense. You will find new ways of thinking about current events and about personal and business decisions, as well as current events and politics.

The study of economics does not dictate the answers, but it can illuminate the different choices.

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Micro-economics

Microeconomic topics

• Consumer and producer surplus
• Substitute goods
• Complements
• Economies of scale
• Price elasticity of demand
• Cross elasticity of demand
• Income elasticity of demand
• Price elasticity of supply
• Market equilibrium
• Production possibility frontiers
• Positive and normative statements
• Opportunity cost
• Specialisation and division of labour
• Positive externalities – the benefit to a third party.
• Negative externalities – cost imposed on a third party.
• Merit goods – People underestimate the benefit of good, e.g. education
• Demerit goods – People underestimate costs of good, e.g. smoking
• Public Goods – Goods which are non-rival and non-excludable
• Information failure – lack of information
• Government failure
• Buffer stocks
• Carbon Trading
• Specific tax
• Behavioural economics – Examining the many factors influencing how agents make decisions

A-level Micro topics

• Objectives of firms
• Diminishing returns
• Allocative Efficiency
• Productive Efficiency
• Dynamic Efficiency
• Pareto efficiency
• Labour Market Imperfections
• Monopolistic competition
• Perfect competition
• Competition policy
• Contestable markets
• Price discrimination
• Pricing strategies
• Privatisation

Post A-level topics

• Isoquant and isocosts
• Adverse selection explained
• Asymmetric information problem
• Expected Utility Theory
• Marginal utility theory
• Indifference curves and budget lines
• AS Macro Economics Essays

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• Guide to Microeconomics

How Microeconomics Affects Everyday Life: Renting an Apartment

Learn to make the best use of limited resources

Microeconomics  is the study of how individuals and businesses make choices regarding the best use of limited resources. Its principles can be usefully applied to decision-making in everyday life—for example, when you rent an apartment. Most people, after all, have a limited amount of time and money. They cannot buy or do everything they want, so they make calculated microeconomic decisions on how to use their limited resources to maximize personal satisfaction.

Similarly, a business also has limited time and money. Businesses also make decisions that result in the best outcome for the business, which may be to maximize profit. 

The field of microeconomics interests investors because individual consumer spending accounts for roughly 70% of the U.S. economy. Microeconomics and macroeconomics (the study of the larger aggregate economy) together make up the two main branches of economics.

Key Takeaways

• Microeconomics uses a set of fundamental principles to make predictions about how individuals behave in certain situations involving economic or financial transactions.
• These principles include the law of supply and demand, opportunity costs, and utility maximization.
• Microeconomics also applies to businesses.

Some Principles of Microeconomics

Before using microeconomics to understand its use in renting an apartment, it helps to understand some fundamentals. Microeconomics uses certain basic principles to explain how individuals and businesses make decisions. These are:

• Maximizing utility —Maximizing utility means that individuals make decisions to maximize their satisfaction.
• Opportunity cost —When an individual makes a decision, they also calculate the cost of forgoing the next best alternative. If, for instance, you use your frequent flier miles to take a trip to the Bahamas, you will no longer be able to redeem the miles for cash. The missed cash is an opportunity cost .
• Diminishing marginal utility — Diminishing marginal utility , another economic input, describes the general consumer experience that the more you consume of something, the lower the satisfaction you get from it. When you eat a burger, for example, you may feel very satisfied, but if you eat a second burger, you may feel less satisfaction than you experienced with the first burger.
• Supply and demand —Two other important economic principles are supply and demand as they appear in the market. Market supply refers to the total amount of a certain good or service available on the market to consumers, while market demand refers to the total demand for that good or service. The interplay of supply and demand helps determine prices for a product or service, with higher demand and limited supply typically making for higher prices.

The amount of the U.S. economy accounted for by consumer spending

Applying Microeconomics to Renting an Apartment 

To help understand how microeconomics affects everyday life, let’s study the process of renting an apartment. In New York City there is a limited supply of housing and high demand. This explains why housing costs in New York are high, according to the principles of microeconomics just outlined.

Maximizing utility

To rent an apartment, first you must determine a budget. For this you will have to take into account your income and how much money you are looking to spend on housing, in such a way as to maximize your utility or satisfaction. If you allocate too much of your income to rent, you will limit the money you have left for other expenses. Thus, you will have to decide what amount of money is the maximum you are willing to part with for rent, what amenities you must have in your apartment, and which neighborhoods are acceptable to you. All of these decisions and calculations are about maximizing utility.

Opportunity cost

Based on all the above factors, you set a budget to get the most satisfaction for the least possible rent. You will not pay more than you have to in order to get what you want. Given that in this supply-constrained market there are others also interested in renting the more in-demand apartments, you might find that you will have to increase your budget. To do this you will have to cut down on spending in another area, such as entertainment, travel, or eating out. That is the opportunity cost of finding the right apartment.

Supply and demand

Similarly, a landlord will seek to rent an apartment at the highest price possible, as their motivation generally is to get the best return from renting out the apartment. In setting the rent, the landlord would have to take into account the demand for the apartment in that specific neighborhood. If there are enough potential renters interested in the apartment, the landlord would set a higher rent. If the rent is set too high, compared with what other landlords in the neighborhood are charging for comparable apartments, renters will not be interested. Thus the business owner, in this case the landlord, also makes decisions based on supply and demand.

And while the landlord would attract a larger pool of prospective renters by setting a rent that is lower than what other neighborhood landlords are charging for comparable apartments, they would be missing out on some rental income, which will not maximize their utility. Thus, both you and the landlord will make decisions to get the best outcome for yourselves given the constraints you face.

The Bottom Line

In a capitalist economy, both consumers and businesses make thousands of big and small decisions each year guided by microeconomic issues. Consumers seek to maximize their satisfaction when they go out and shop for anything from paper towels to apartments, houses, and cars. Businesses set prices and make other decisions based on microeconomics. The prices that consumers will pay depends on the supply of a specific good, such as an apartment, as well as how much others are willing to pay for it.

Bureau of Economic Analysis. “ National Income and Product Accounts Tables ," Download "Table 1.1.6. Real Gross Domestic Product, Chained Dollars." 

• Lease Definition and Complete Guide to Renting 1 of 22
• 10 Reasons Why Renting Could Be Better Than Buying 2 of 22
• When Is the Best Time to Rent an Apartment? 3 of 22
• How Microeconomics Affects Everyday Life: Renting an Apartment 4 of 22
• 7 Homeowner Costs Renters Don’t Pay 5 of 22
• Tips for Renting a Vacation House 6 of 22
• Rent-to-Own Homes: How the Process Works 7 of 22
• How to Read a Lease 8 of 22
• Rent Control: Definition, How It Works, Vs. Rent Stabilization 9 of 22
• Rent Ceiling: Meaning, Pros and Cons, Example 10 of 22
• Step-Up Lease: What it Means, How it Works 11 of 22
• 4 Things Landlords Are Not Allowed to Do 12 of 22
• Eviction: Definition and How It Works Under the Law 13 of 22
• Retaliatory Eviction: Meaning, Legal Eviction, Example 14 of 22
• Lessee: The Person That Rents a Property 15 of 22
• Month-to-Month Tenancy: Pros and Cons of Short Term Renting 16 of 22
• Tenancy-at-Will: Definition, How It Works, Protections, and Rules 17 of 22
• Holdover Tenant: Definition and Legal Rights 18 of 22
• Homeowners Insurance vs. Renter’s Insurance: What’s the Difference? 19 of 22
• Renters Insurance: What It Is and How It Works 20 of 22
• Comprehensive Guide to Renters Insurance 21 of 22
• Best Renters Insurance Providers 22 of 22

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Essay on Microeconomics and Macroeconomics

In this essay we will discuss about Microeconomics and Macroeconomics. After reading this essay you will learn about: 1. Meaning of Microeconomics 2. Scope of Microeconomics 3. Limitations of Microeconomics 4. Importance of Microeconomics 5. Problems of Interrelation and Integration of Micro and Macroeconomics 6. Meaning of Macroeconomics 7. Scope and Importance of Macroeconomics 8. Limitations of Macroeconomics.

• Essay on the Limitations of Macroeconomics

Essay # 1. Meaning of Microeconomics:

Microeconomics is the study of the economic actions of individuals and small groups of individuals. This includes “the study of particular firms, particular households, individual prices, wages, income, individual industries, and particular commodities.”

It concerns itself with the analysis of price determination and the allocation of resources to specific uses. The determination of equilibrium output of the firm or industry, the wage of a particular type of labour, the price of a particular commodity like rice, tea, or car are some of the fields of microeconomic theory.

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In the words of Ackley:

“Microeconomics deals with the division of total output among industries, products and firms and the allocations of resources among competing groups. It considers problems of income distribution. Its interest is in relative prices of particular goods and services.”

Microeconomics is, in fact, a microscopic study of the economy, according to Maurice Dobb. It is like looking at the economy through a microscope to find out the working of markets for individual commodities and the behaviour of individual consumers and producers.

In other words, in microeconomics we study the interrelationships of individual households and individual firms, and individual firms and individual industries to each other. In this sense, microeconomics involves the study of aggregates.

Essay # 2. Scope of Microeconomics :

“Price and value theory, the theory of the household, the firm and the industry, most production and welfare theory are of the microeconomic variety,”

Thus, microeconomics studies:

(i) How resources are allocated to the production of particular goods and services,

(ii) How the goods and services are distributed among the people, and

(iii) How efficiently they are distributed.

While studying the conditions in which the price of a particular good is determined, microeconomics assumes the total quantity of resources as given and seeks to explain their allocation to the production of that commodity.

The allocation of resources to a particular good depends upon the prices of other goods and the prices of factors producing them. It is, therefore, the relative prices of goods and services that determine the allocation of resources.

In other words, other things being equal, it is the allocation of resources that determines what to produce, how to produce, and how much to produce. This decision, in turn, depends upon the relative prices of goods and services. Thus, microeconomics is the study of price theory: how the price of a particular commodity like rice, tea, milk, fans, scooters, etc. is determined; how the wages of a particular type of labour, interest on a particular type of capital asset, rent on a particular land and profits of a particular entrepreneur are determined; and how efficiently the various resources are allocated to individual consumers and producers.

We briefly study these problems below.

In microeconomics the analysis of price determination and allocation of resources is studied in three different stages:

(i) The equilibrium of individual consumers and producers,

(ii) The equilibrium of a single market, and

(iii) The simultaneous equilibrium of all markets. Individual consumers and producers are unable to influence the prices of goods they buy and sell. A consumer is faced with given prices and he buys that much of the commodity which maximises his utility.

For an individual producer, input and output prices are given and he produces that much of the product which maximises his profits. In the market, the price and quantity bought and sold are determined by the actions of buyers and sellers. The aggregate demand and supply curves are derived from individual demand and supply curves.

The equality of aggregate demand and supply curves determines the price and the quantity bought and sold in the market. It applies both to product and factor markets. By relaxing some of the assumptions of the perfectly competitive market, this analysis is extended to monopoly, oligopoly and monopolistic, competition markets.

Finally, in microeconomics, the interrelations between the different markets are taken so as to determine all prices simultaneously.

Though, it is generally said that microeconomics is related to partial equilibrium analysis which is the study of the equilibrium position of an individual, a firm, an industry or group of industries, yet it is also a study of their interrelationships and interdependences within the economy which falls under the general equilibrium analysis.

First, there is the consumers market in which the quantity of each commodity demanded depends not only on its own price but also on the price of every other commodity available in the market. In this market, consumers meet producers to buy commodities which the former demand and the latter sell.

The demand of consumers for the various commodities depends upon their prices and the prices of the services which they offer. In other words, a consumer earns by selling the productive services he owns and creates demands for commodities.

The price at which a commodity sells depends upon its costs of production. The costs of production, in turn, depend on the quantities of the various productive services employed and the prices paid for them. Thus the supply of commodities in the market depends on the costs of the firms, and the prices and quantities of the various productive services used by them.

Secondly, there is the producers market or factor market. In this market, the demand for productive services (factors of production) comes from the producers, and supply from the consumers. The quantity of a service (factor) used in producing a commodity depends on the relationship between the prices of that service and other services, and on the prices of commodities.

Here producers meet labourers, capitalists, landlords and other resource-owners. In this market, money incomes are earned by resource-owners who own and sell their resources, the majority of whom are consumers. Thus microeconomics is a study of interacting units of consumers, producers, and resource-owners.

In this system, all prices are relative to one another. A change in any one price establishes a ripple which touches both product and factor markets. The interrelation between product and factor markets through prices is shown in Figure 1.

In this system, consumers and firms are linked through the product market where goods and services are bought and sold. They are also linked through the factor market where the factors of production are bought and sold. In the inner circle that consumers who are resource-owners sell productive resources in the factor market which are used by firms.

Supply: Supply refers to the number of goods and services offered to the marketplace by the manufacturers. We can delineate the association between the quantity demanded and the price. We can also contemplate the link between the quantity supplied and the price.

Supply Curve

Elasticity: The concept of elasticity is solicited with the receptivity of quantity demanded or quantity supplied to a variation in price. If a minute variation in price brings about an enormous change in the quantity demanded, then the price elasticity of demand is said to be highly elastic. On the contrary, if a variation in price has a minute or no effect on the quantity demanded, then the demand is said to be highly inelastic.

Additional Reading: Difference between Microeconomics and Macroeconomics

Equilibrium: Presuming that all the determinants of supply and demand are to be persistent except the price, an enterprise will manufacture where the supply curve converges the demand curve.

Market intervention: In capitalist structures, authorising markets to handle freely is contemplated to be advantageous but it is a predominantly agreed fact that market forces cannot be allowed to operate for all the goods and services obligatory by the community. Some goods and services are termed as ‘ public goods and services ’ , which means that they can only be furnished sufficiently by the market  intervention

Maximum Price

Theory of a firm or an enterprise: The theory of an enterprise is a branch of microeconomics that scrutinises the distinct ways in which the entities within an industry may be organised and pursued to procure lessons from these substitute structures.

The mentioned concepts are covered under the topic microeconomics. To know more about such interesting concepts, stay tuned to BYJU’S.

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73 Microeconomics Essay Topics

🏆 best essay topics on microeconomics, ✍️ microeconomics essay topics for college, 👍 good microeconomics research topics & essay examples, 🎓 most interesting microeconomics research titles.

• The Analysis of “Microsoft’s Aggressive New Pricing Strategy“ Using Microeconomic Theory
• Walmart Brand Products’ Microeconomic Analysis
• How the Pearl Industry Causes Microeconomic Shifts
• Principles of Microeconomics
• American Express Firm’s Microeconomic Analysis
• Microeconomic Theory: Wal-Mart Stores Inc.
• Microeconomics: Understanding the Concept of Price Theory
• Foundation of Microeconomics. Country Analysis The three core economic issues which influence the decision-making and economic stability of the countries are What, How and to Whom.
• Microeconomics: Production, Costs and Profits Costs are defined as opportunities foregone when a decision is made; therefore, opportunity costs are costs of any action considered in form of greatest opportunity forgone.
• Microeconomic Analysis: Walmart Based on the factors considered and the criteria for choosing the resource and cost bases, specific solutions for optimizing the Equate product line will be proposed
• Microeconomics: Challenges Facing Financial Managers In this paper, the author analyzes the challenges faced by financial managers. The problems are highlighted in Microeconomics: Understanding the Market System.
• “Economics in One Lesson” by Henry Hazlitt in the Context of Microeconomics This paper discusses the book “Economics in One Lesson” by Henry Hazlitt and its relevance in understanding microeconomics.
• Microeconomics: Scarcity and Social Provisioning Venturing into international trading is beneficial for a nation’s economy; however, clear policies should be set to prevent a collapse in traditional economies.
• Microeconomic Factors of Opioid Addiction It was distinguished that people who struggle with employment or financial difficulties often develop unhealthy coping mechanisms such as opioid addictions.
• Microeconomic Analysis of Australian Oil Market Since the Morrisson government significantly promoted the idea of reducing the pressure on the cost of living, one of the levers was the reduction of fuel excises.
• The US-China Trade War: Microeconomics Principles This paper uses the microeconomics principles to substantiate the impact of trade between China and the US, and the trade war on businesses and consumers of both countries.
• Microeconomics Case Analyses in Pharmacology This paper examines the pharmaceutical industry using the theory and models of industry structure and Pfizer’s make-or-buy decision for developing and producing its COVID vaccine.
• Microeconomics and Principles of Economics As far as some basic economic principles are concerned, it is important to mention that all of them are crucial for the creation of a successful business model.
• The Analysis of Microeconomics of Sberbank The purpose of this paper is to research the microeconomics of Sberbank, explore the state of the company on the market, and provide recommendations for its further expansion.
• Microeconomic Tools: Cost-Benefit Analysis The paper discusses an economic tool to aid social decision-making, that is mostly used by the government and private sector to evaluate the desirability of a given intervention.
• Microeconomics: Government and Market Relations Critiquing government policies and attempting to create one that will bring success are two different activities.
• Foundations of Microeconomics: Franchise Firms Franchise firms are the small businesses that are operated in such a way that they deal with goods of large corporations. They usually buy the products from the corporation at a discounted price.
• Microeconomics Principles: Production, Costs and Profits In the short run the companies may be very profitable leading to increase in the quantity produced by the companies which eventually attracts new entrants into the sector.
• Supply and Demand in Microeconomics: Pricing and Equilibrium
• Microeconomics vs. Macroeconomics: Key Differences and Interactions
• The Role of Microeconomics in Understanding Market Behavior
• The Fundamental Principles of Microeconomics
• Microeconomics and Rational Decision-Making: Analyzing Choices
• Elasticity of Demand in Microeconomics: Measuring Responsiveness
• Microeconomics of Perfect Competition: Features and Implications
• How Microeconomics Affects Everyday Life
• Monopoly in Microeconomics: Market Power and Pricing
• Microeconomics of Oligopoly: Strategic Behavior and Competition
• Principles of Microeconomics: Scarcity and Social Provisioning
• Monopolistic Competition: Characteristics and Implications in Microeconomics
• Consumer Behavior in Microeconomics: Preferences and Utility
• Microeconomics of Production: Cost Analysis and Efficiency
• Homogeneous and Differentiated Products in Microeconomics
• Microeconomics of Firms: Profit Maximization and Pricing Strategies
• Housing Supply and Suppliers: Are the Microeconomics of Housing Developers Important?
• Microeconomics of Market Failures: Causes and Solutions
• The Role of Government Intervention in Microeconomics
• Microeconomics of Information Asymmetry: Market Imperfections
• Externalities in Microeconomics: Costs and Benefits to Society
• Microeconomics of Labor Markets: Wage Determination and Employment
• Game Theory in Microeconomics: Strategic Decision-Making
• Microeconomics of Income Distribution: Gini Coefficient and Inequality
• The Microeconomics of Changing Income Distribution in Malaysia
• Microeconomics of Taxation: Incidence and Economic Efficiency
• How Microeconomics Affects Business
• Microeconomics of Price Controls: Ceilings and Floors
• International Cartels and the Microeconomics of the Emerging U.S. Electricity Industry
• Microeconomics of Market Structures: Comparing Models
• Knowledge Representation and Search Processes: A Contribution to the Microeconomics of Invention and Innovation
• Microeconomics of Competition Policy and Antitrust Laws
• The Microeconomic Foundations of Aggregate Production Functions
• Microeconomics and Its Main Functions
• Managerial Economics: Microeconomics Concepts
• Global Warming and Microeconomics: Efficient and Effective Policies to Solving Climate Change
• Microeconomics and Operations Research: Their Interactions and Differences
• Average Cost and Marginal Cost in Microeconomics
• Microeconomics: Definition, Uses, and Key Concepts
• Neoclassical Theory and the Teaching of Undergraduate Microeconomics
• Microeconomics of Regulation: Impact on Market Outcomes
• Normative Microeconomics and the Social Contract
• What Is Microeconomics: An Overview of Its Concepts
• Microeconomics of Competition and Monopolistic Behavior
• On the Reappraisal of Microeconomics: Economic Growth and Change in a Material World
• Microeconomic Justification of the Hoarding Function
• Quantitative Tools for Microeconomic Policy Analysis
• Microeconomics of Exchange Rates: Impact on Trade
• Principles of Microeconomics: Competitive Markets
• Microeconomics of Social Welfare Programs: Efficiency and Equity

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This essay topic collection was updated on December 27, 2023 .

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What Is Microeconomics?

Updated 06 April 2023

Downloads 29

Category Economics

Topic Microeconomics

Microeconomics

Microeconomics is the study of individual markets and the interactions between buyers and sellers. It is one of the two branches of economics, along with macroeconomics.

Macroeconomics

Macroeconomics focuses on the national economy as a whole and studies its growth. It also covers topics such as the effects of minimum wages, taxes, price supports, and monopolies on individual markets.

It is an important branch of economics and has many benefits that place it above other branches in the field. It is also a very useful tool for investors and market analysts.

The Term Microeconomics

The term microeconomics comes from the Greek words mikros, meaning "small" and akron, meaning "to go." It is used to describe the analysis of the behavior of individuals or firms (called agents in economics) that affect the prices, supply, and demand for goods in the economy.

General Equilibrium Theory and Partial Equilibrium Theory

Traditionally, microeconomics has been performed in the form of general equilibrium theory or partial equilibrium theory. Both of these theories assume that individuals and businesses make rational decisions that lead to perfect market clearing or other ideal conditions.

They also assume that the choices that people make are based on a utility-maximizing process, in which they are trying to maximize their own utility while preserving the value of the resources they use.

While both of these theories are useful, there are some areas where they differ. A major difference is that microeconomics argues that decision makers do not coordinate ex ante, but instead act independently of each other.

Another major difference is that while microeconomics is theoretical, macroeconomics relies on the results of actual experiments. These can be very useful for making predictions and conclusions about what to expect from an economic situation.

Importance of Microeconomics

Microeconomics is an important and relevant branch of economics, as it provides valuable insight into what may happen in a particular market. Its strengths are its simplicity and close proximity to the real world.

The field of microeconomics has numerous subfields and disciplines, which are all rooted in the theory of consumer and firm behavior. It also has a strong relationship to other fields of economics, such as labor economics and industrial organization.

Core Concepts of Microeconomics

Its core concepts include pricing theory, income theory, and consumer behavior theory. It also includes production theory, which examines the decision-making process of producers and how it affects the quantity of goods they are able to sell at a given price.

Some other key concepts in microeconomics are resources allocation, market equilibrium, and economic welfare. These are all crucial to the understanding of how the economy works and what it aims to achieve.

Supply and Demand

Supply refers to the amount of a good that is available for sale at a given price, while demand is the amount of a good that is demanded. Generally, when a price is fixed, supply and demand are equal.

This is the basic concept behind the Utilitarian approach to economics. It aims to maximize the utility of an individual while considering the value of the resources that they consume and the price at which they can afford them.

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• Microeconomic Theory

Microeconomic theorists create models that apply rigorous mathematical reasoning to economic and social contexts in order to examine the behaviors of individuals and firms. Microeconomic theorists in the Department of Economics, as well as those at the Fuqua School of Business, study such diverse topics as mechanism and market design, oligopolistic competition, social and economic networks, and individual and collective decision-making.