Microeconomic Theory
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A Microeconomic Theory is an Economics theory that studies the behavior of individuals and small impacting organizations in making decisions on the allocation of limited resources.
- Context:
- It can be researched by Theoretical Microeconomists.
- It can be applied by Applied Microeconomists.
- Example(s):
- Theory of Production, the economic process of converting inputs into outputs.
- Cost-of-production theory of value.
- Economic-Agent Search Theory.
- Economic-Agent Matching Theory.
- …
- Counter-Example(s):
- See: Behavioral Economics, Microeconomic Analysis, Scarcity, Market (Economics), Good (Economics), Supply And Demand, Microfoundations, Relative Price, Price Elasticity, Theory of The Firm.
References
2020
- (Wikipedia, 2020) ⇒ https://en.wikipedia.org/wiki/microeconomics Retrieved:2020-3-26.
- Microeconomics (from Greek prefix mikro- meaning "small" + economics) is a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses. Microeconomics shows conditions under which free markets lead to desirable allocations. It also analyzes market failure, where markets fail to produce efficient results. While microeconomics focuses on firms and individuals, macroeconomics focuses on the sum total of economic activity, dealing with the issues of growth, inflation, and unemployment and with national policies relating to these issues. Microeconomics also deals with the effects of economic policies (such as changing taxation levels) on microeconomic behavior and thus on the aforementioned aspects of the economy. Particularly in the wake of the Lucas critique, much of modern macroeconomic theories has been built upon microfoundations—i.e. based upon basic assumptions about micro-level behavior.