Micro-Economics

MICRO-ECONOMICS,

MEANING: The word "Micro" is taken from Greek prefix (Mikros) which means 'small'. Micro-economics is the study of the economic actions of individuals and small groups of individuals.
This includes " the study of particular firms, particular households, individual prices, wages, income, individual industries and particular commodities.
It concerns itself with analysis of price determination and the allocation of resources to specific uses.
In the words of Ackley: Micro-economics deals with the division of total output among industries, products and firms and the allocation of resources among competing groups.

SCOPE: Micro-economics studies:
1. How resources are allocated to the production of particular goods and services.
2. How the goods and services are distributed among the people.
3. How efficiently they are distributed.
While studying the conditions in which the price of a particular good is determined, micro-economics assumes the total quantity of resources as given and seeks to explain their allocation to the production of that commodity.
In micro-economics the analysis of price determination and allocation of resources is studied in three stages:
A. The equilibrium of individual consumers and producers.
B. The equilibrium of a single market.
C. The simultaneous equilibrium of all markets. Besides, micro-economics studies how efficiently the various resources are allocated to individual consumers and producers within the economy. Efficiently in the allocation of resources is related to the study of welfare economics. It involves the study of efficiency in consumption, efficiency in production and overall welfare.