Why Do We Study Microeconomics?


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lesley louis answered
Microeconomics means 'small economic'. For example, monitoring how much families, small businesses and individuals spend on day to day items such as supplies, fuel, groceries and clothes. Or how much an average household or small business spends on their gas and electric per month. 

Microeconomics also examines different behaviors of consumers throughout the year and how this affects the supply and demand for goods and services, which then causes prices to increase or decrease. This can sometimes be a vicious circle.

We study microeconomics quite simply to gain a better knowledge of economic activity and to help anyone in an economic environment to understand what is going on in the market and how things can be changed for the better. For example, how a small business can save money or how much an average family spends on their weekly groceries, or fuel bill.

The study of economics on a much larger scale is called 'macroeconomics', macro meaning 'large'. This could be the study of the country's economic state. Part of a macroeconomics study will look at the country's unemployment figures, interest rates and inflation. These are studied to try and avoid recessions and depressions. The government may make adjustments and make changes in order to stabilize the economy and keep the country ticking over.

Some countries will hold an annual budget day, where these adjustments and changes will be made. The usual changes are interest rates, taxes, and general price increases. Most budgets are not in favor of the average household; although they may be necessary, they are rarely welcome. It is basically a plan for saving and spending money.

Both micro and macro economic studies are equally as important to the economic industry.

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