Protection Status Define microeconomic and explain the importance of microeconomic

Define microeconomic and explain the importance of microeconomic


Answer-A/c to K.E.Boulding

“Micro-economic is the study of particular firms particular household, individual prices, wages, incomes, individual industries and particular commodities’’.

Importance of microeconomics

The importance of micro-economic can be studied under the following points:-

1. Essential for the knowledge of whole economy:-

1.  The sum of individual demand, individual production etc., make the aggregated demand and combined supply. Hence micro-economics analysis is essential for knowing the position of whole of economy. We have to find out the nature of individual unit.

HHelpful in solving economic problems:- 

The problems of pricing of product and pricing of factors of production are main economic problems. Each factor of production demands for remuneration for it. Each seller wants to get maximum price for his product. What price should be paid, at what price the 1.  problems should be sold all these problems are studied in micro-economics.

Helpful in determining economic policies:- 

1.  The economic policies of government are studied in micro-economics in order to know us to how they influence the functioning of individual units.

    Investigation of condition of economic welfare:- 

1.  The study of micro-economics also reveals the effects of public expenditure and public revenue along with the position of individual consumption individual living standard etc. The classical economists favoured micro-economic analysis as a measuring rod of economic welfare.

H  helpful in decision making for individual units:

1.  Micro-economics analysis proves helpful in taking rational decision about the problems of individual units profit of individual firm, individual income etc.

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