Microeconomics
Topic: Scarcity, Choice and Economic Systems · NCERT: Class 12, Ch 1 "Introduction (Macroeconomics)"; Class 12, Ch 1 "Introduction (Microeconomics)"
Meaning
Microeconomics studies individual economic units and single markets. It looks at how consumers and producers interact, and how the price and quantity of one good are set by demand and supply. It takes conditions in the wider economy, such as national income and the general price level, as given. It explains the choices of a single household, firm or industry.
Example
Why did tomato prices at a mandi rise this week? How will a farmer decide between growing paddy and millets? How does a garment firm choose between workers and machines? These are microeconomic questions.
Don't confuse with
- Macroeconomics: Macroeconomics studies national totals, such as GDP, total employment and inflation. Microeconomics studies the price and output of a single good or firm.
Related concepts
- Positive economic analysis
- Normative economic analysis
- Macroeconomics
- Ceteris paribus
- Representative good