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    Microeconomics studies how consumers and suppliers make economic decisions, how these decisions determine the allocation of resources and the impact public policy has on the market. It looks at the behaviour of individual firms and households and how the supply and demand for goods and services are affected by their decisions. Microeconomics also looks at how national economic policies affect the economy. It is importnat to understand how microeconomics works in order to understand macroeconomics. 

    In contrast to macroeconomics, which studies the economy as a whole, microeconomics looks at the interrelationships between elements of the economy, such as consumers, markets, and industries. Microeconomics analyzes the conditions that produce the most efficient level of consumption and production.

    Scarcity is the main drive behind the daily choices individual consumers, producers, and suppliers make. The main goal of consumers, producers, and governments is to find a way to maximize satisfaction with the resources available. Consumer decisions are generally based on budget restraints and personal preferences.

    Opportunity cost is a way to measure the cost of something, in order to determine if the something should be chosen or purchased. This is one concept that is frequently used in microeconomics.

    Microeconomics helps us understand consumer and market behaviour, which is a crucial part of studying economic theory. Understanding microeconomics helps us to maximize resource utilization, build on welfare economics, and provide methods for assessing economic policies.

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    BrainMass Categories within Microeconomics

    Demand & Supply

    Solutions: 838

    Demand and supply in microeconomics is related to having enough products to sell in order to meet consumer demand.

    Efficiency & Equity

    Solutions: 15

    Efficiency and equity are conditions of a mixed economy that are seen as microeconomic goals.

    Utility & Demand

    Solutions: 68

    The relationship between utility and demand falls under the theory of consumer behaviour.

    Preferences & Choice

    Solutions: 36

    In economics, preference refers to the assumptions of a product’s alternatives, relating to the degree of satisfaction or utility that the product gives the consumer.

    Output & Costs

    Solutions: 952

    When looking at output and costs, the positive slope of the aggregate supply curve shows us how costs and prices are related to output.



    Solutions: 355

    Production is the act of creating output that is used and valued by consumers.


    Solutions: 47

    Uncertainty is related to the accuracy of the economic model that tries to determine levels of growth and is tied to most fields in economics.

    BrainMass Solutions Available for Instant Download

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    Production, Unemployment and Inflation

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