by Marc Davis

The study of microeconomics reveals how both consumers and businesses make financial decisions. Although a variety of impulses and imperatives drive these decisions, a principal determinant for the consumer is price, and for business the supply-demand factor as it relates to pricing and output.

There are also other elements that influence financial decision making, some simple, some complex, all of which were described in the preceding sections, and all of which ripple through the economy at large.

The great lesson of microeconomics is how individual decision making can be described in certain mathematical formulae, may be predicted with reasonable accuracy, and how each of these individual choices, both consumer and business, when multiplied many million-fold create the economic conditions in which we live.







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