Microeconomics is an independent part of such a science as economic theory. This section reveals all the problems that arise as a result of the emergence, growth and development of a small business entity. Small businesses include small firms, households, and more.
Microeconomics is a science that was formed at the turn of the 19th and 20th centuries. The development of this direction was initiated by the emergence of a huge number of small farms and small firms. The relations that appeared between the participants in these entities did not fit the existing norms and standards. This is precisely what caused the emergence of a separate section capable of explaining and resolving conflict situations that may be characteristic of a small independent market object.
Household is a term that refers to one person or a group of people who have common income and property. This "organism" only together offers its factors of production, and also consumes benefits and makes decisions.
Another term that microeconomics also makes wide use of is firm. It means an enterprise that produces a variety of goods and services using factors of production. The objects that will show interest in the benefits released by the company are households, government organizations and other enterprises. In this case, the subject that solves the emerging problems of microeconomics is the government. His decisions directly affect the activity of business companies.
As you know, almost all the resources that are used in the process of activity are limited. As well as people's knowledge about how to produce a particular product. The created conditions of this kind pose a person with a choice: how to produce, how to do it more efficiently, etc. Therefore, in limited conditions, it is microeconomics that helps to give preference to the right option.
She considers the emergence of contradictions between the availability of goods and the possibility of their rational use. It is this characteristic feature that represents the proportion, which is the basis of all economic relations in the market, which (in turn) affect the processes of production of the national economy.
The functions of microeconomics:
1. Cognitive - the study and analysis of all processes arising in the system.
2. Practical - the ability to apply the data obtained during analysis in practice.
3. Predictive - the ability to timely identify and reassess the most important prospects for the development of the economic mechanism.
4. Ideological - the formation and stabilization of a certain clear worldview that meets the interests of the whole society.
Microeconomics is a science, the object of which is an independent business entity. The subject of this section is the relationship that arises between entities regarding the use of limited resources. The objective of this course is to systematize, summarize and explain all microeconomic factors.