Microeconomics Examples

9 Key excerpts on "Microeconomics Examples"

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  eBook - PDF

  Microeconomics

  A Global Text

  • Judy Whitehead(Author)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  A typical definition of economics is that it is the study of the production, consumption and distribution of goods and services. Economics is sometimes also described as the study of the allocation of scarce resources among competing ends. Both these definitions aptly fit the sub-discipline of microeconomics. Economics has been dichotomized into microeconomics and macroeconomics. This division separates the analysis into two levels. Macroeconomics is concerned with aggregates such as the Gross National Product, the money supply and employment or unemployment rates, while microeconomics is concerned with the behaviour of individuals, firms and small groups up to the level of the industry or market. It can therefore be said to be concerned with the production, consumption and distribution of goods by the micro units of individuals, firms and markets within the economy. It can also be considered a study of scarcity and the choices to be made for the attainment of goals within constraints. These goals are those set by consumers, producers and policy makers in the market. Microeconomics uses a structured or scientific approach to the investigation of the behaviour of these individual units of consumers and producers within a market in order to explain and predict how they respond to various signals in the market and how they are affected by the market structure. The study of these micro units is done within a theoretical framework that goes back to first principles to establish behavioural laws that may then be applied to the market. Indeed, some economists are bold enough to claim that microeconomics is to business or management studies what physics is to engineering. It is recognized, however, that modern microeconomics goes beyond the role of the establishment of laws and deals with the use and application of these laws as well.

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  eBook - ePub

  Microeconomics For Dummies

  • Lynne Pepall, Peter Antonioni, Manzur Rashid(Authors)
  • 2016(Publication Date)
  • For Dummies

    (Publisher)

  Part I

  Getting Started with Microeconomics

  For Dummies can help you get started with lots of subjects. Visit www.dummies.com to learn more.

  In this part …

  See how microeconomics looks at firms and individuals.

  Discover how microeconomics builds on people’s choices.

  Understand how consumers choose.

  Look at the ways firms make their decisions.

  Passage contains an image Chapter 1

  Discovering Why Microeconomics Is a Big Deal

  In This Chapter

  Introducing the areas that are the focus of microeconomics

  Understanding the key roles of rational decision-making, competition, and cooperation

  Seeing that markets don’t always work

  As we’re sure you know, micro as a prefix often indicates something very small, such as a microchip or a microcosm. Micro can also mean something that isn’t small itself but that is used to examine small things, such as a microscope.

  Microeconomics is the area of economics that studies the decisions of individual consumers and producers and how they come together to make markets. It explores how people decide to do what they do and what happens when interests conflict. It also considers how people can improve markets through their actions, the effects of laws, and other outside interventions. So despite the name, microeconomics is in fact a huge subject.

  Traditionally, people contrasted microeconomics with macroeconomics — the study of national economies and weighty topics such as growth, unemployment, inflation, national debt, and investments. But over the years, the scope of microeconomics has grown; today economists analyze topics in macroeconomics using microeconomic tools.

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  eBook - PDF

  The Economics Companion

  • Graham Mallard(Author)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  2 the next four chapters Microeconomics is primarily concerned with three types of individual agent: consumers, producers and the government. They’re collectively referred to as eco-nomic actors throughout this book, but in other books they’re called economic agents. They interact with one another in markets, where they engage in some sort of trade. This is usually, but not necessarily, the trading of products for money: there’s also the market of the house-hold, for instance, in which family members interact with one another to make family decisions. The ultimate goal of studying microeconomics, then, is for us to understand how these markets func-tion: how the prices of products – by which I mean goods and services – are determined, what products are produced and sold, and in what quantities, and how beneficial this is to society as a whole. This is only possible by studying how economic actors make their introducing smaller-scale analysis: the microeconomic world introducing smaller-scale analysis: the microeconomic world 56 2 2 decisions about what to produce and buy – and so what those decisions actually are – and what results when they make them. This is what micro-economics is all about. Key term: microeconomics Microeconomics is the study of the decision-making behaviour of economic actors and of how their interaction with one another in markets determines what products are produced and sold, and in what quantities, what prices they’re traded at, how beneficial this is to society and what problems are caused, and how it can be improved. The purpose of the following four chapters is to introduce and examine each of these actors and the markets in which they interact. They will cover: 1 How consumers decide what to buy (Chapter 5). 2 How producers decide how much to produce and sell (Chapter 6). 3 How consumers and producers interact with one another to determine the prices of products and the quantities of them produced and sold (Chapter 7).

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  Contemporary Society

  An Introduction to Social Science

  • John Perry, Erna Perry(Authors)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  Chapter 18

  © Rawpixel.com/Shutterstock

  Principles of Economic Behavior: Microeconomics and Macroeconomics

  IN THIS CHAPTER, YOU WILL LEARN

  •   the difference between microeconomics and macroeconomics;

  •   who are the participants in the market system;

  •   what is the essence of the price system;

  •   what are the market forces;

  •   the need for a public sector and for government intervention in the economy;

  •   about the economic goals of the society;

  •   the instruments at the government’s disposal for intervening in the economy and the reason for their imperfect functioning; and

  •   the major economic problems faced by the economy, and how the American economy responds to them.

  E conomics is sometimes called the “dismal science,” and many do not consider it a science at all. In fact, the predictive power of economics is weak, and much of its success is predicated on a positive psychology. Economists have learned much about the functioning of the economy, however, and they know which specific actions will have which economic result.

  The Small Picture and the Large Picture

  The analysis of an economic system is done on two levels: microeconomics and macroeconomics. Microeconomics is the study of individual behavior in the economy, as well as of specific markets. It deals with the details, the behavior of individual components of the economy, such as, for instance, what determines the price of a single product or why single consumers or firms act as they do.

  When we look at the economy from the micro point of view, in other words, we look at single trees, not at the forest. We want to know how an individual, or a company, behaves in the economy. What do individuals do when they lose their jobs? How do they respond to various incentives and opportunities? Why do they buy certain goods and not others? What is the price of a specific product? What are the expenses of a particular firm? What is the income of a given household?

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  Doing Economics

  • Peter Smith(Author)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  PART II

  The scope of economics

  Passage contains an image

  3

  Micro and macroperspectives

       

  This chapter will:

  • highlight the distinction between microeconomics and macroeconomics

  • introduce the demand and supply model and the key notion of equilibrium

  • explain how the model enables analysis of how markets adjust to changes in market conditions

  • discuss how markets may fail to produce a good outcome for society

  • note that there may be situations in which economic agents may not act rationally

  • introduce key aspects of macroeconomic thinking

  • identify macroeconomic policy objectives and instruments

  Chapter 2 discussed how economics developed as a subject, initially mainly focusing on decisions made by individual economic agents until Keynes drew attention to the need to consider how the economy as a whole operates.

  This highlights a distinction between macroeconomics (the study of interactions between economic variables at the aggregate level) and microeconomics (the study of the economic behaviour of individual economic agents). This distinction remains in many (if not most) university degree programmes, although it is recognised that there are common approaches and ways of thinking used in both, and that much macroeconomic analysis builds upon microeconomic principles.

  Although this book is not intended to be a textbook, this chapter introduces some of the key terms and concepts used in both microeconomics and macroeconomics, and how these are analysed by economists. This should give you a flavour of what to expect on your degree programme. We begin with microeconomics.

  Microeconomics

  The focus of microeconomics is on studying the economic behaviour of individual economic agents, and how this shapes decision-making. Initially, we will consider decisions taken by consumers (who buy goods and services) and firms (which supply goods and services). This takes us to what is probably the most famous of all models in economics – the demand and supply model. This will be used to introduce the way in which economists work.

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  eBook - ePub

  An MBA in a Book

  Everything You Need to Know to Master Business - In One Book!

  • Xander Cansell(Author)
  • 2023(Publication Date)
  • Arcturus

    (Publisher)

  Economics is the study of how people make decisions about what to buy, what to sell and what to produce in a world that has limited economic resources. When we say ‘people’ in this context we could mean individuals, but also groups or companies. It is concerned with decisions that involve money, but also trade-offs that involve how we use resources, what quantities of goods or services should be produced, how markets work and how to optimize all these decisions and compromises.

  There are two main categories of economic resources that form the building blocks of an economy:

  1.  Human resources : People who work and the people who manage them.

  2.  Non-human resources : Things like land, minerals, oil, technology, etc.

  Economists are particularly interested in the decisions that need to be taken where there is a trade-off – a situation where the choosing of one thing means giving up another thing. This is where the important concept of scarcity comes in. If resources are not scarce there is no need for any trade-offs. If everything were abundantly available and anyone could have anything that they wanted, then there would be no need to talk about allocating resources.

  Microeconomics is the study of how people (or companies, or groups) make decisions about using limited resources, which can include things like buying, selling and producing them (as well as other economic actions).

  For instance, if you were to offer the last sweet in the packet to your friend, you would be making a microeconomic decision – you would be deciding how to use a limited resource, the last sweet. To help understand this further, there is the concept of opportunity cost.

  OPPORTUNITY COST Opportunity cost

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  Business for Communicators

  The Essential Guide to Success in Corporate and Public Affairs

  • Sandra Duhé(Author)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  Chapter 3

  A Micro and Macro View of the Economy

  DOI: 10.4324/9781003000600-4

  In Chapter 2 , we covered the origins, benefits, and sources of opposition to capitalism. Capitalism is the organizing framework for economic activity in the U.S., and the economy is the marketplace where the pursuit of self-interest and profit takes place. Although the mathematics of economics can get complex, economics as a field isn’t just about numbers. In my opinion, the most interesting parts of this social science focus on the intriguing relationships between limited resources, expectations, information, and the choices people make in their daily lives. Economics is, ultimately, a study of human behavior. Understanding how the economy works and what it means for your firm requires that we examine the economy from two different, but highly related, perspectives: the micro, or firm, level and the macro, or broader economy, level. Let’s get started.

  Ten Principles of Microeconomics

  Microeconomics focuses specifically on how the actions of individuals and firms affect resource allocations related to the production, exchange, and consumption of goods and services in an economy (Chappelow, 2019c ). Factors of production, including land, labor, money, and other assets, are obviously limited in quantity. There’s not an endless supply of cash, time, production capacity, or labor force upon which a firm can draw. As such, choices must be made, and those choices fall on the shoulders of line management1 who are primarily responsible for monitoring and growing the bottom line.2

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  A Course in Microeconomic Theory

  • David M. Kreps(Author)
  • 2020(Publication Date)
  • Princeton University Press

    (Publisher)

  chapter one An overview This opening chapter sets out some basic concepts and philosophy for the rest of the book. In particular, we address four questions: What are the basic categories in microeconomic theory? What are the purposes of microeconomic theory? How does one's purpose influence the levels of scope, detail, and emphasis in one's model? How will the development of the theory proceed in this book? 1.1. The basic categories: Actors, behavior, institutions, and equilibrium Microeconomic theory concerns the behavior of individual economic actors and the aggregation of their actions in different institutional frame-works. This one-sentence description introduces four categories: The in-dividual actor, traditionally either a consumer or a firm; the behavior of the actor, traditionally utility maximization by consumers and profit max-imization by firms; an institutional framework, which describes what options the individual actors have and what outcomes they receive as a function of the actions of others, traditionally the price mechanism in an imper-sonal marketplace; and the mode of analysis for modeling how the various actors' behaviors will aggregate within a given framework, traditionally equilibrium analysis. The actors In the standard treatment of microeconomics, the two types of actors are the individual consumer and the firm. We will follow the standard approach by regarding the consumer as an actor. For the firm, we will follow the standard approach for a while by treating the firm as an actor. But firms can also be thought of as institutions within which the behavior of various sorts of constituent consumers (workers, managers, suppliers, customers) are aggregated. From this alternative perspective, what a firm does results from the varying desires and behavior of its constituent con-sumers, the institutional framework the firm provides, and the equilibrium

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  Microeconomics for MBAs

  The Economic Way of Thinking for Managers

  • Richard B. McKenzie, Dwight R. Lee(Authors)
  • 2016(Publication Date)
  • Cambridge University Press

    (Publisher)

  Both analytical paradigms are hardly perfect means of ferreting out understandings about human behavior, which is to say that conventional microeconomics need not be jettisoned because it has problems. A challenge for economists at this time is to find some way of integrating the two analytical approaches, which we cannot even try to complete here. Principles of rational behavior in society and business 53 A Along your journey through this book and your course, just keep in mind as we apply microeconomic theory to business and a large number of other areas that we, the authors, view the economic way of thinking as a partial view of life. All disciplines must acknowledge the same. They all have their limits, which means everyone can benefit from shifts back and forth across several intellectual plains. Part A Theory and public policy applications With these introductory caveats in mind, we can start by asserting that microeconomics rests on certain assumptions about individual behavior (as is true of all other disciplines, as they must ). One is that people are capable of envisioning various ways of improving their position in life. This chapter reviews and extends the discussion begun in Chapter 1 of how people – businesspeople included – cope with scarcity, which means choosing among the alternatives for improvement people can envision. According to microeco-nomic theory, consumers and producers make choices rationally , so as to maximize their own welfare (whether their interests are selfish or charitable). This seemingly innocuous basic premise about human behavior will allow us to deduce an amazing variety of implications for business and many other areas of human endeavor. The premise under-girds our study of mutually beneficial trades considered in Chapter 1 and the forces of supply and demand to be covered in Chapter 3 .

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