Microeconomics

microeconomicmicroeconomic theoryprice theorymicroeconomistmicro-economicmicroapplied microeconomicsmicroeconomymicro-economicsApplied Microeconomic Theory
Microeconomics (from Greek prefix mikro- meaning "small" + economics) is a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.wikipedia
621 Related Articles

Economics

economiceconomisteconomic theory
Microeconomics (from Greek prefix mikro- meaning "small" + economics) is a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.
Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions.

Economic efficiency

efficiencyefficienteconomically efficient
It also analyzes market failure, where markets fail to produce efficient results.
In microeconomics, economic efficiency is, roughly speaking, a situation in which nothing can be improved without something else being hurt.

Market failure

market failuresmarket imperfectionmarket imperfections
It also analyzes market failure, where markets fail to produce efficient results.
Economists, especially microeconomists, are often concerned with the causes of market failure and possible means of correction.

Utility maximization problem

utility maximizationutility-maximizingmaximize utility
Microeconomic theory typically begins with the study of a single rational and utility maximizing individual.
In microeconomics, the utility maximization problem is the problem consumers face: "how should I spend my money in order to maximize my utility?"

Microfoundations

microeconomic foundationsmicrofoundedattempts at establishing micro-foundations
Particularly in the wake of the Lucas critique, much of modern macroeconomic theories has been built upon microfoundations—i.e. based upon basic assumptions about micro-level behavior.
In economics, the microfoundations are the microeconomic behavior of individual agents, such as households or firms, that underpins an economic theory.

Macroeconomics

macroeconomicmacroeconomistmacroeconomic policy
Microeconomics stands in contrast to macroeconomics, which involves "the sum total of economic activity, dealing with the issues of growth, inflation, and unemployment and with national policies relating to these issues".
Macroeconomics and microeconomics, a pair of terms coined by Ragnar Frisch, are the two most general fields in economics.

Consumer choice

consumer theoryincome effectconsumer choice theory
Microeconomic theory progresses by defining a competitive budget set which is a subset of the consumption set.
The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves.

Supply and demand

demandsupplylaw of supply and demand
The theory of supply and demand usually assumes that markets are perfectly competitive.
In microeconomics, supply and demand is an economic model of price determination in a market.

Relative price

relative pricesrelativerelative-price effect
One goal of microeconomics is to analyze the market mechanisms that establish relative prices among goods and services and allocate limited resources among alternative uses.
Microeconomics can be seen as the study of how economic agents react to changes in relative prices, and of how relative prices are affected by the behavior of those agents.

Marshallian demand function

Marshallian demandMarshalliandemand function
Economists call the solution to the utility maximization problem a Walrasian demand function or correspondence.
In microeconomics, a consumer's Marshallian demand function (named after Alfred Marshall) specifies what the consumer would buy in each price and income or wealth situation, assuming it perfectly solves the utility maximization problem.

Mathematical economics

mathematical economisteconomicsmathematical
The technical assumption that preference relations are continuous is needed to ensure the existence of a utility function.
Vilfredo Pareto analyzed microeconomics by treating decisions by economic actors as attempts to change a given allotment of goods to another, more preferred allotment.

Missing market

In such cases, economists may attempt to find policies that avoid waste, either directly by government control, indirectly by regulation that induces market participants to act in a manner consistent with optimal welfare, or by creating "missing markets" to enable efficient trading where none had previously existed.
A missing market is a situation in microeconomics where a competitive market allowing the exchange of a commodity would be Pareto-efficient, but no such market exists.

Comparative statics

comparative staticcomparative-staticcomparative static derivatives
Although microeconomic theory can continue without this assumption, it would make comparative statics impossible since there is no guarantee that the resulting utility function would be differentiable.
Comparative statics is a tool of analysis in microeconomics (including general equilibrium analysis) and macroeconomics.

Economist

economistseconomicsgovernment economist
In such cases, economists may attempt to find policies that avoid waste, either directly by government control, indirectly by regulation that induces market participants to act in a manner consistent with optimal welfare, or by creating "missing markets" to enable efficient trading where none had previously existed.
Within this field there are many sub-fields, ranging from the broad philosophical theories to the focused study of minutiae within specific markets, macroeconomic analysis, microeconomic analysis or financial statement analysis, involving analytical methods and tools such as econometrics, statistics, economics computational models, financial economics, mathematical finance and mathematical economics.

Public choice

public choice theorypoliticsConcentrated benefits and diffuse costs
This is studied in the field of collective action and public choice theory.
The Journal of Economic Literatures classification code regards public choice as a subarea of microeconomics, under JEL: D7: "Analysis of Collective Decision-Making" (specifically, JEL: D72: "Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior").

Utility

utility functionutility theoryutilities
The technical assumption that preference relations are continuous is needed to ensure the existence of a utility function.
Although preferences are the conventional foundation of microeconomics, it is often convenient to represent preferences with a utility function and analyze human behavior indirectly with utility functions.

Market (economics)

marketmarketsmarket forces
Supply and demand is an economic model of price determination in a perfectly competitive market.
Microeconomics (from Greek prefix mikro- meaning "small" and economics) is a branch of economics that studies the behavior of individuals and small impacting organizations in making decisions on the allocation of limited resources (see scarcity).

Transitive relation

transitivetransitivitytransitive property
To economists, rationality means an individual possesses stable preferences that are both complete and transitive.
Such relations are used in social choice theory or microeconomics.

Factors of production

factor of productionresourcesinputs
Frequently used elasticities include price elasticity of demand, price elasticity of supply, income elasticity of demand, elasticity of substitution or constant elasticity of substitution between factors of production and elasticity of intertemporal substitution. The cost can comprise any of the factors of production: labour, capital, land, entrepreneur.

Entrepreneurship

entrepreneurFounderentrepreneurs
The cost can comprise any of the factors of production: labour, capital, land, entrepreneur.
Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead of assuming that resources would find each other through a price system).

Perfect competition

perfectly competitiveperfect marketimperfect market
The theory of supply and demand usually assumes that markets are perfectly competitive.
The use of the assumption of perfect competition as the foundation of price theory for product markets is often criticized as representing all agents as passive, thus removing the active attempts to increase one's welfare or profits by price undercutting, product design, advertising, innovation, activities that – the critics argue – characterize most industries and markets.

General equilibrium theory

general equilibriumgeneral-equilibriumgeneral equilibrium model
Applications include a wide array of economic phenomena and approaches, such as auctions, bargaining, mergers & acquisitions pricing, fair division, duopolies, oligopolies, social network formation, agent-based computational economics, general equilibrium, mechanism design, and voting systems, and across such broad areas as experimental economics, behavioral economics, information economics, industrial organization, and political economy.
Therefore, general equilibrium theory has traditionally been classified as part of microeconomics.

Financial economics

financial economistfinancial economistsfinance
It is built on the foundations of microeconomics and decision theory.

Labour economics

laborlabor economicslabor market
The cost can comprise any of the factors of production: labour, capital, land, entrepreneur.
Labour economics can generally be seen as the application of microeconomic or macroeconomic techniques to the labour market.

Natural monopoly

natural monopoliesinformation monopolymonopolist
However, not all monopolies are a bad thing, especially in industries where multiple firms would result in more costs than benefits (i.e. natural monopolies).
Two different types of cost are important in microeconomics: marginal cost, and fixed cost.