What is Microeconomics

The microeconomics is the branch of economics that studies the behavior, actions and decisions of individual economic agents, such as individuals, families or companies, and their relationships and interaction in the markets. In this sense, it differs from macroeconomywhich focuses on large-scale economic systems, such as that of a country or region.

The microeconomics focuses its object of analysis on the goods, prices, markets and economic agentsand studies, analyzes and explains how and why each individual makes economic decisions to satisfy their own needs and interests.

In this sense, he bases his study on different theories: consumer, demand, producer, general equilibrium and financial asset markets.

  • consumer theory studies and explains the factors that intervene in consumer decisions: what to buy, how he decides to buy it, why, for what and in what quantity.
  • demand theoryon the other hand, studies how the quantity and quality of products, goods and services available in the market will vary their prices according to the demand of the individual economic agents, considered together or separately.
  • The Producer Theory studies how the producing company acts and what decisions it makes to increase its profits in the market, implying internal decisions, such as the number of workers to hire, their schedules, workplace and production standards, as well as the extent to which All of the above would vary with a change in the prices of the product in the market or in the materials used for its manufacture.
  • general equilibrium theoryfor its part, is in charge of studying, analyzing and explaining the interaction between all the theories of microeconomic dynamics.
  • The theory of financial asset markets considers the different types of markets that may exist in relation to the number of suppliers and applicants, whether it is monopoly, duopoly, oligopoly or perfect competition.
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What is microeconomics for?

Among some of its fundamental objectives, the microeconomics focuses on understanding the behavior of companies, households and individuals, and the way in which this influences the market mechanisms that establish the relative prices of products, goods and services. In this way, their findings are fundamental in the study of economic theory, since they serve as a basis for other areas, such as macroeconomics, to develop their theories, and thus, as a whole, provide an explanation and response to the various facts and phenomena. that constitute the dynamics of the economy.