Give reason or explain the following statement.
Micro economics studies individual economic unit.
Yes, I agree with this statement.
i. The term Micro Economics is derived from the Greek word “Mikros” which means “Small”. Micro economics gives a detailed analysis of one part of the economy or society. It studies the behaviour of individual units of the economy, such as households, firms, industries and markets.
ii. Micro economics is concerned with the study of behaviour of individual element(s) of an economy, whereas, macro economies concerned with the study of behaviours of an economy as whole.
iii. Micro economics gives a microscopic picture of the economy. The activities of numerous economic units and their inter-relationship are studied and analysed minutely through this method.
Micro economics is a study that focuses on the behaviour of an individual economic units such as the consumer and the producer. It analyses how consumers make their consumption choices and take decisions, given their incomes and prices of goods and services. Similarly, it analyses how firms decide how much to produce by applying different input combinations. The basic focus of such a study is the determination of prices in the factor and the commodities market.
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- Introduction and Features of Micro Economics