What is Micro Economics?

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The word Micro in economics has been taken from a Latin word Mikros which signifies small. In Micro-economic theory problems related to individual industries, firms, markets, and other economic units are extensively assessed and studied.

In this way, under Micro-Economics, economic problems pertaining to individual economic units are studied such as the price determination of a commodity, equilibrium of a firm, equilibrium of an industry etc.

In other words, under this branch of economics it is examined as to how the price of a commodity will be determined, how much quantity of a product a firm will produce, how many units of a factor a firm will employ, how many units of a commodity a consumer will demand etc.

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Scope:

Therefore, as explained above, the main economic problems that form the scope of Micro Economics are as follows:

(i) Theory of demand

(ii) Production theory

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(iii) Price theory

(iv) Factor-pricing

(v) Welfare economics.

In the words of Prof. Boulding, “Micro-economics is the study of particular firms, particular household, individual price, wage, income and particular commodity.

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