What is microeconomic theory?

Microeconomic theory is under the root of the economy that seeks to explore the interactions between individual buyers and sellers through decision -making processes of consumers and enterprises. This contrasts with macroeconomic theory, which is instead focused on wide trends and behavior that characterizes whole economic systems. One of the basic ideas of microeconomic theory is that consumers and businesses have limited sources that have to decide how to assign to maximize usefulness, happiness or profit. Many entrepreneurs study microeconomic theory because many ideas can be used directly to operate business. Such a theory can help owners of enterprises decide how much of the product or service it offers and how much money it charges.

Microeconomic theory study is usually performed provided by the market economy or economy based on the offer and demand based on competition. In a completely simplified microeconomic system, it offers more sellers givenThe product, more buyers wants such a product and buyers or sellers cannot significantly affect the prices of the relevant goods and services. Those who study microeconomics tend to examine why consumers in such an idealized system prefer one dealer over another and how different factors affect the supply and demand of the product or service.

The costs of the opportunity are widely considered to be the basic concept of microeconomic theory. Any assignment of time or other sources causes the cost of the opportunity or something that gave up to get something else. For example, buying one product causes costs for an opportunity for another product that a person wants, but can no longer afford. Likewise, working for an hour can provide one amount of money that can be spent on products or services, but the worker costs other activities that he could complete at that time.

Although mostModels used to teach and study microeconomic theory are highly simplified and completely controlled on the market, many economists use microeconomic theory to study more realistic systems. For example, when examining supply and demand on a given market, taxes and various social care systems can take into account. They can also examine the properties in addition to actual goods and services that affect economic systems such as technological progress, other forms of innovation and labor markets. Specialized areas of microeconomic theories examine the specific microeconomic terrain of cities, governments, legal systems and other groups or places that have unique microeconomic systems.