Explain the subject matter of Micro Economics.
Write short notes Subject matter of microeconomics.
Microeconomics deals with the study of the following theories and subject matters:
- Theory of product pricing- The theory of product pricing explains how the prices of goods are determined in the market with the help of demand and supply factors. The demand is studied by studying the consumer behaviour and the supply is studied by studying the cost and production behaviour of the firm.
- Theory of factor pricing- The theory explains how the prices of various factors of production, namely, land, labour, capital and entrepreneur are determined in the factor market, in the form of rent, wages, interest and profits, respectively.
- Theory of economic welfare- This theory of microeconomics deals with the allocation of resources. It involves making decisions such as what to produce, how much to produce, when to produce, for whom to produce and by what technique to produce.
Concept: Introduction and Features of Micro Economics
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