Limited preview - 2016. Different types of microeconomics analysis: The different types of microeconomics analysis are as follows: Micro static; Comparative micro static ; Micro dynamics; Economic theory: An economic theory is defined as a model along with the specified and empirical economic variables, concepts and facts used to explain and predict the changes. 252 0 obj<> endobj The economics of information has recently become of great interest to many - possi… This contrasts with macroeconomic theory, which is focused instead on the broad trends and behaviors that characterize entire economic systems. 254 0 obj<>stream %PDF-1.3 %���� On the basis of analysis, the equilibrium between two variables in microeconomics is divided into three parts as micro statics, comparative and dynamic which are also called types of microeconomics. And, of course, they vary widely in how well they accomplish those goals. �"(?���؈�jS6���n�L�e��������B\��޴����^� 0000012229 00000 n Keynesian theory expects fiscal policy to offset business cycles (employ counter-cyclical strategies). Where macroeconomics looks at the big picture of the economy, microeconomics looks at the individual behaviors that drive economic processes. 0000012989 00000 n Elements of well defined economic theory. This is suitable because economies are essentially a set of rules for production, employment, exchanging value, … These special characteristics (as compared with other types of goods) complicate many standard economic theories. startxref It is easy to create but hard to trust. 0 It analyzes the economic situation at a point. Microdynamics deals with the time path and process of the adjustment itself. 0000034247 00000 n Microeconomic theory is a subfield of economics that seeks to examine the interactions between individual buyers and sellers through the decision-making processes of consumers and businesses. 0000010710 00000 n Types of Macroeconomics. Suppose, individual demand and supply are two economic variables, their relationship can be explained with the help of the following figure. 0000036088 00000 n 0000016198 00000 n Bullet Ant As the list illustrates, there are nuances about what constitutes a theory — some try to describe how the world works, and others try to describe how it should work. Meaning and Definition of Profit: In the theory of income distribution all incomes are classified according to their sources. 0000002773 00000 n It is easy to spread but hard to control. 0000010073 00000 n 0000010375 00000 n 0000017023 00000 n It analyzes the economic situation at a point. 0000037559 00000 n The microeconomic theory explains the condition of efficiency in both consumption and production that ensures maximum social welfare. Classical microeconomic theory was developed by Adam Smith (Wealth of Nations, 1776) and later economists, such as David Ricardo The essential aspect of classical microeconomic theory include: Determination of market price and output Adam Smith mentioned the ‘invisible hand of the market.’ He noted how when people act out of self-interest, markets tend to provide goods and services which are demanded by the population. 0000026391 00000 n We divide our study of microeconomics into five sections. 0000026897 00000 n 0000000916 00000 n 0000025829 00000 n 0000037803 00000 n Profit as a Contractual Income 4. 0000011470 00000 n Theory of Optimal Taxation (e.g., broad base, low rate, tax less-elastic activities) I could go on, but you get the idea. xref Foreign trade and exchange rate determination - Microeconomic theory of demand, supply, elasticity of demand etc help in understanding the impact of change in tariff on the terms of trade. fiscal policy: Government policy that attempts to influence the direction of the economy through changes in government spending or taxes. 0000018247 00000 n Microeconomic theory is a subfield of economics that seeks to examine the interactions between individual buyers and sellers through the decision-making processes of consumers and businesses. The following are illustrative examples of microeconomics. In this figure, the demand curve (D) intersects the supply curve (S) at a point E to determine the price OP and quality OQ at a given time period.

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