Question

Define or explain 'micro economics'.

Answer 1

Micro economics deals with the study of economics from the view point of individual unit. When economic problems are studied considering small economic units like an individual consumer, or an individual producer, we are referring to micro economics.

Components of microeconomics:

1) Theory of consumer behaviour: This deals with the law of demand and consumer equilibrium.

2) Theory of producer behaviour: This deals with the law of supply and producer equilibrium.

3) Price theory: This refers to the determination of prices of factor of production in the factor market and prices of goods in the commodity market.