Microeconomics
  1. Microeconomics: Introduction
  2. Microeconomics: A Brief History
  3. Microeconomics: Assumptions and Utility
  4. Microeconomics: Factors Of Consumer Decision-Making
  5. Microeconomics: Factors Of Business Decision-Making
  6. Microeconomics: Making Economic Decisions - Starting A Business
  7. Microeconomics: Microeconomics in Action
  8. Microeconomics: Conclusion

Microeconomics: Introduction

by Marc Davis

In every area of human enterprise and endeavor, there's a big picture and a little picture, the macro and the micro. The macro looks at things through a wide-angle lens; the micro looks at things through a narrow-focus lens.

This is also true in economics and its two branches, macroeconomics and microeconomics.

Macroeconomics studies large-scale phenomena in the national economy, and even in global economies, because they're interrelated. These would include central bank interest rates, national employment numbers, gross national product figures, trade deficits or surpluses, foreign currency exchange rates, and other major economic activity and data.

By contrast, microeconomics studies a limited, smaller area of economics, including the actions of individual consumers and businesses, and the process by which both make their economic decisions – buying, selling, the prices businesses charge for their goods and services and how much of these goods and services they produce and or offer.

Microeconomic study reveals how start-up businesses have determined the competitively successful or unsuccessful pricing of their goods and services based on consumer needs and choices, market competition and other financial and economic formulas.

Microeconomics also studies supply-demand ratios and its effect on consumer spending and business decision-making.

At the heart of consumer purchasing is the concept of utility, a classic economic idea. Utility is the term applied to a consumer's satisfaction after the purchase of some product or service. Because a consumer's feeling of satisfaction may be impossible to precisely quantify in actual numbers, the concept may seem impractical. But a reasonably close approximation is useful to businesses, and may also be useful to the individual consumer who can probably measure that feeling of satisfaction with a "gut" reaction.

These concepts are explained in the following tutorial on microeconomics. The information is both practical and theoretical, and fascinating as well. It will provide the reader with a big picture of small picture economics.

Microeconomics: A Brief History

  1. Microeconomics: Introduction
  2. Microeconomics: A Brief History
  3. Microeconomics: Assumptions and Utility
  4. Microeconomics: Factors Of Consumer Decision-Making
  5. Microeconomics: Factors Of Business Decision-Making
  6. Microeconomics: Making Economic Decisions - Starting A Business
  7. Microeconomics: Microeconomics in Action
  8. Microeconomics: Conclusion
Related Tutorials
  1. Economics

    Economics Basics

RELATED TERMS
  1. Green Economics

    Green economic theories encompass a wide range of ideas all dealing ...
  2. Environmental Economics

    An area of economics that studies the economic impact of environmental ...
  3. Laissez Faire

    An economic theory from the 18th century that is strongly opposed ...
  4. Vertical Integration

    When a company expands its business into areas that are at different ...
  5. Political Economy

    The study and use of how economic theory and methods influences ...
  6. Elastic

    A situation in which the supply and demand for a good or service ...
RELATED FAQS
  1. What are some examples of positive correlation in economics?

    Positive correlation exists when two variables move in the same direction. A basic example of positive correlation is height ... Read Full Answer >>
  2. What is the concept of utility in microeconomics?

    Utility is a loose and controversial topic in microeconomics. Generally speaking, utility refers to the degree of removed ... Read Full Answer >>
  3. Which factors have the most influence on the law of demand?

    According to economic theory, the law of demand states that the relative demand for a good or service is inversely correlated ... Read Full Answer >>
  4. What math skills do I need to study microeconomics?

    Microeconomics can be, but is not necessarily, math-intensive. Fundamental microeconomic assumptions about scarcity, human ... Read Full Answer >>
  5. How does fracking affect natural gas prices?

    Fracking helps to keep natural gas prices lower by increasing the available supply to consumers. This is perhaps more true ... Read Full Answer >>
  6. What is the difference between Keynesian and Neo-Keynesian economics?

    Classical economic theory presumed that if demand for a commodity or service was raised, then prices would rise correspondingly ... Read Full Answer >>
Hot Definitions
  1. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  2. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  3. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  4. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  5. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center