Question

Explain the features of Micro economics. 

OR 

Explain the characteristics or nature of micro economics.

Answer 1

Features of Micro Economics :

• Based on certain ssumption : Micro economics is based on ‘ceteris paribus’ assumption i.e., other things remaining constant like full employment, laissez faire policy, perfect competition, pure capitalism, etc.
• Study of Individual units : Micro economics deals with the study of behaviour of small individual units of the economy such as individual units of the economy such as individual consumer, individual firm, individual industries, individual prices, etc.
• Slicing Method : It divides or slices the economy into small units and studies each unit in detail e.g. study of a particular household demand in detail.
• Analysis of Market Structures : Micro economics analyses different market structures such as perfect competition, monopoly, monopolistic competition, oligopoly, etc.
• Use of Marginalism Principle : The term ‘marginal’ means change brought in total by an additional unit. Marginal analysis helps to study a variable through the changes by which producers and consumers take economic decisions using this principle.
• Price Theory : Micro economics is known as price theory because it determines the prices of goods and services as well as prices of factors of production.
• Limited Scope : The study of micro economics is limited to individual economic unit only. It does not deal with macro problems like unemployment, inflation, deflation, poverty, unemployment, population, etc.
• Partial I quilibrium : Micro economics analysis deals with partial equilibrium which analyses equilibrium position of an individual economic unit i.e. individual consumer, individual firm, etc.