Anonymous

What Are The Examples Of Microeconomics?

3

3 Answers

Connor Sephton Profile
Connor Sephton answered
Examples of microeconomics include individual households, business firms and industrial activities. Any example where an individual section of the economy makes decisions based on the allocation of limited resources are examples of microeconomics. Microeconomics is defined as the branch of economics that studies how these examples make their decisions. It is most commonly applied to markets where services or goods are being bought and sold. The study of microeconomics also looks as how these decisions, in turn, affect the supply and demand for these goods and services. It also studies the determined prices and how these prices determine the quantity supplies and the quantity demanded. Microeconomics deals with the effects of national economic policies and one of its main goals is to analyze market mechanisms that help to establish prices amongst services and goods, alongside analyzing the allocation of limited resources. Microeconomics is also used to analyze market failure, i.e. Where markets fail to produce efficient results. It can therefore describe how perfect competition can be achieved through theoretical conditions. The branch of economics can be subdivided into a number of fields of study. These include; markets under asymmetric information, choice under uncertainty, general equilibrium and economic applications of game theory.

Microeconomics considers four categories that a firm's profit could fall in to, assuming that they are following rational decision making. These four categories are economic profit, normal profit, loss minimizing conditions and shutdown. Economic profit is made when a firm's average total cost is less than the price of each addition product at the profit maximizing output. The normal profit is one that occurs when a firm's economic profit is zero. If a firm is in a loss minimizing condition it means that the price is between the average total cost and average variable cost at profit maximizing output. Lastly, a firm may go into shutdown if the price is below average variable cost at the profit maximizing output.

Often examples of microeconomics can be found by contrasting it to the study of macroeconomics. In comparison, macroeconomics considered the sum total of economic activity. This deals with the issues of inflation, unemployment and growth.
Florio Potter Profile
Florio Potter answered

Example 1:  Suppose you have the economy of a country (let’s say China). The people and the industry of China need clothes, food, cellphones, raw materials, cars etc. But according to the fundamental law of inadequacy there is a finite number of resources. So to solve the problem of infinite needs/finite resources, China has to make some decisions regarding:
1. Which products should be produced and the volume of production.
2. How to produce these products
3. Who ‘s gonna get these products
The answer of these questions can be given from the state government in a totalitarian system or from each individual in a completely open market (or combination of those in in-between systems). [Most examples use the totalitarian system because of the ease of use and the small amount of variables.] Possible example decision: China may choose to reduce the production of clothes to increase the food production, through labor intensive production and investment. Then China may choose to supply the food to the consumers rather the meat industry. For more information get help at CodeAvail- Online Computer Science Assignment
help

Answer Question

Anonymous