Nature and Scope of Micro Economics

The text then introduces externalities in the context of environmental protection and public goods. Finally, issues such as poverty, labor market issues, information, public economics are covered. The book ends with a section on international trade and globalization. It covers everything typically covered in the introductory microeconomics course. Each chapter has a ‘Clear It Up’ sections where the most typical misconceptions are addressed.

Supply and demand is one of the most critical concepts at the microeconomic level. This is the comparison of the level of consumer demand for particular goods to the available supply in the marketplace. In a highly competitive industry in which consumers possess many choices, supply might exceed demand.

On the other hand, in rural development, economics can be used to analyse the shortage of natural resources, obtain the best price for production, study constraints of productivity, adapt to climate change, etc. Microeconomics used for the study of a business unit, but not the economy as a whole is known as managerial economics. The various tools used in microeconomics like cost and price determination, at an individual level becomes the foundation of managerial economics. “Micro economics studies the behaviour of individual parts and units of any economy, e.

From what I have seen, the content of the book is accurate and error free. There are a few rare typos, but nothing that would distract the reader from the material. It also does not seem to be biased even though it covers some controversial topics in a few chapters, however it is in a manner of stating facts, not choosing sides, which is the most important distinction. There could be the argument that many examples are related to the US economy, however they contribute to the relevancy of the topic discussed. All examples included are very well chosen and one of the strong points of the book.

Answers to review questions are provided as well, which can be extremely useful to students for self-assessment and better understanding of concepts. The PDF version of the book provides a comprehensive index at the end of it. The online version of the book has a glossary at the end of each of the modules from each chapter, which comes in very handy. The books begins with production possibility frontiers, incorporating budget lines in that content, then proceeds to supply and demand analysis. Examples from labor and financial markets reinforce supply and demand analysis before proceedings to elasticity and consumer choice. The next section of the book discusses industry structure and includes antitrust policy.

Understanding Microeconomics

Microeconomics also examines whether resources are efficiently allocated and it spells out the condition for the optimal allocation of resources so as to maximize output and social welfare. The foundation of microeconomics was ‘Wealth of Nation’ which was published by Adam Smith in 1776. All the economic theories of classical economists were mainly microeconomic in nature. The famous economists of this period were Adam Smith and his followers.

  • Production costs are above what may be achieved by perfectly competitive firms, but society benefits from the product differentiation.
  • Each chapter begins with a real world economic example or question in “Bring it Home” section, and it also ends with a detail explanations related to the examples or questions in “Bring it Home”.
  • Microeconomics helps in determining the factor rewards for land, labour, capital, and entrepreneur in the form of rent, wages, interest, and profit respectively.
  • The “Law of Supply” states that, in general, a rise in price leads to an expansion in supply and a fall in price leads to a contraction in supply.
  • Within chapters the introduction clearly lays out what is covered in each section and sections can easily be re-ordered or skipped.

Production costs are above what may be achieved by perfectly competitive firms, but society benefits from the product differentiation. Examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities. Under it returns of factors of production like interest, wages, salary, and determination of profit and study. The new equilibrium is at point E1 where the new demand curve is D1D1 and the price is E1Q1 while the demand and supply are OQ1. This type of microeconomic analysis explains the process of change between an initial or original equilibrium and a new equilibrium.

Meaning of Demand

The textbook overall is very comprehensive, it covers all the areas of study and concepts that are typically covered in a Principles of Microeconomics course. The amount of information included in this book is impressive and some of the chapters actually have more information than a typical textbook of this level. As with any other textbook there are also a few minor shortcomings. Some of the chapters can be a little longer than anticipated, which could have a distracting side effect on students.

It emphasized the role of land and agriculture in ensuring a country’s prosperity. The Mercantilists focused on trade and commerce and the accumulation of gold and silver. The Physiocrats focused on productive work, leading to the generation of agricultural surplus. Even though the term Economics had not come into usage then, there was thinking on economic issues in Western Europe in the 16th to late 17th centuries that went by the name Mercantilism or merchant-like thoughts. It emphasized the role of the government in following policies leading to a positive Balance of Trade, which was thought to be the index of the country’s prosperity. Though these two branches of economics appear different, they are actually interdependent and complement one another.

Micro-Economics vs Macro-Economics

In fact, there Is no free market economy after great depression of 1930. Microeconomics is helpful in solving the problems of individual firms. It enables the consumers to allocate their 1ncome on different goods in such a way that total utility is maximized; thus, helping them to avoid the wastage of resources. It also helps to frame economic policies aimed at achieving public welfare e.g. tax exemption for the poor, determination of rewards according to qualification and productive capabilities, minimum wage laws etc. It includes the potential measures of maintaining the economic prosperity of men as consumers and producers and improving that prosperity.

Micro Economics

This benefits you once you pay for advertising and use other promotional techniques to promote your brand and its benefits. These marketing techniques are critical in achieving competitive advantages over other companies trying to optimize performance as customers make choices based on their needs and budgets. The way the text is separated in the sections mentioned above (in the “Clarity” part of the review) makes it very engaging and interactive for students. This way the student has the opportunity to read the material pertaining to a specific concept, relate it to a real-world example and also try a problem that would help deepen the understanding of that concept. It also helps by not making all the material in a chapter too overwhelming to go through.

The book is biased toward an assessment of economic outcomes from market approaches and fairly free-market driven processes. Early in their careers, young aspiring economists ought to be exposed to an understanding of the enclosure of the commons and the overriding importance of alternative property regimes. “Because things are driven by tradition, [DOES NOT NECESSARILY MEAN] there is little economic progress or development”. This OER text offers readers a comprehensive breadth of topics from an introductory standard microeconomics perspective. This text features a table of contents, index, end-of-chapter key terms, and a comprehensive chapter/topic list of references.

What is Market Structures? Types of Market Structures

The Consumer equilibrium and the Producer equilibrium are the representatives of partial equilibria. But the existence of equilibrium of all the consumers of the economy or all the producers of the economy generates General equilibrium of consumption or production. Such all along with different criteria of welfare economics are the important issues of microeconomics. In micro economics we study different types of costs of production. The analysis of costs of production may be from short run point of view as well as from long run point of view.

There were only very few (very minor) errors spotted throughout the book, but nothing that would distract or keep students from using the textbook. Very few grammatical errors were found throughout the textbook. I have not found any cultural insensitive issues or examples that would have improper cultural relevance. I think the text is written with very clear language with some technical terminology that is necessary for better and clear understanding of economics. The authors use a story telling format that is easy to read and comprehend. The content is up to date and should constantly be up dated to truly connect the student to the learning objectives as they effect the global economies of today.

Although the free price tag of this book is attractive, the lack of integration between the explanations and the graphs (e.g. no use of color) detracts from the effectiveness of the textbook. Applied microeconomics includes a range of specialized areas of study, many of which draw on methods from other fields. The concept of “market type” is different from the concept of “market structure”. Nevertheless, it is worth noting here that there are a variety of types of markets. The utility maximization problem is the heart of consumer theory.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top