![]() Production theory – This component of microeconomics focuses on how businesses make decisions about what goods or services to produce, and how to produce them in the most efficient way possible.In contrast, the price will decrease if there is a surplus of supply compared to demand. The law of supply and demand states that when there is more demand for a good than there is supply, the price of the goodwill goes up. Supply and demand –This is the most basic component of microeconomics, and it refers to the relationship between the amount of a good or service that is available, and the amount that folks are willing to pay for it.The following are the different components of microeconomics Each of these market structures has different implications for how firms make decisions and how the market functions as a whole. ![]() Moreover, microeconomics also analyzes the various market structures that exist, such as monopoly, competition, and oligopoly. The focus is on individual consumers and firms, rather than on government policy or the overall economy. In microeconomics, the main goal is to understand how people make decisions and how these decisions affect the economy as a whole. It focuses on the behavior of small units, such as individual consumers and firms, and analyzes how their behavior affects prices and quantities in specific markets. Microeconomics is the study of how decisions are made by people and businesses and how those decisions affect markets. ![]()
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