A description of microeconomics and its importance in the whole economy

Game Theory

Microeconomics studies individual markets by simplifying the economic system by assuming that activity in the market being analysed does not affect other markets. In fact, neither of us actually needs to be immoral to get this chain of mutual reasoning going; we need only think that there is some possibility that the other might try to cheat on bargains.

Oligopolies have perfect knowledge of their own cost and demand functions but their inter-firm information may be incomplete. It has been described as expressing "the basic relationship between scarcity and choice ".

We will introduce the general idea of a utility function through the special case of an ordinal utility function.


The subject addresses such matters as tax incidence who really pays a particular taxcost-benefit analysis of government programmes, effects on economic efficiency and income distribution of different kinds of spending and taxes, and fiscal politics. But if Player I is playing s1 then Player II can do no better than t1, and vice-versa; and similarly for the s2-t2 pair.

Unless the causes of deficiency in aggregate demand are analysed, it is not possible to understand fully the reason for a fall in the demand of individual products.

Microeconomics is Study economic variables impacting economy as a whole Study of economic behavior of an individual firm, industry, household, consumers etc in an economy fall in the valuation of a firm in the market 4.

But if microeconomic variables relate to similar individual units, their aggregation into one macroeconomic variable may be wrong and dangerous. This is for the obvious reason that it relies on intuitions about inferences that people should find sensible. Maximisation of Social Welfare - The study of Microeconomic theory can help in deciding the appropriate allocation of resources, commodities and output mix for the maximization of the social welfare.

It also studies effects of monetary policy and fiscal policy. So perhaps you should risk the rocks, since these odds are much better. It is the imposition of an excise duty or sales tax that leads to the diminution of social welfare rather than an income tax.

Effects on agriculture by money and banking systems, monetary and fiscal policies, government policies and international trade. Philosophers share with economists a professional interest in the conditions and techniques for the maximization of human welfare.

Thus we could have two Mother Theresa types here, both of whom care little for themselves and wish only to feed starving children.

This method of analysis is known as partial-equilibrium analysis supply and demand.


The total level of output, income and employment in the economy also depends upon income distribution. Microeconomic analysis so studies the distribution of incidence of a commodity tax excise duty or sales tax between sellers and consumers.

Industrial organization generalizes from that special case to study the strategic behaviour of firms that do have significant control of price. Of course, this point, since it has occurred to us as analysts, can occur to the soldiers too.

The structure of his argument is that the logic of strategic interaction leaves only two general political outcomes possible: Criteria of Social Welfare Maximization of Social Welfare Determination of welfare optimizing output mix, commodity distribution and resource allocation In brief, the Welfare theory discusses and understand the criteria of 'Social Welfare' for any economy and how the same can be achieved in the economy.

Difference between microeconomics and macroeconomics

Plans for the overall increase in national income, output and employment are framed and implemented so as to raise the level of economic development of the economy as a whole.

Exposure to some of the most popular accounting software used in the marketplace by small and medium sized businesses.

Examples of such price stickiness in particular markets include wage rates in labour markets and posted prices in markets deviating from perfect competition. The distinction between acting parametrically on a passive world and acting non-parametrically on a world that tries to act in anticipation of these actions is fundamental.

A game tree is an example of what mathematicians call a directed graph. Gintis points out that the apparent paradox does not arise merely from our supposing that both players are economically rational. As the price of a commodity falls, consumers move toward it from relatively more expensive goods the substitution effect.

The best situation for all people is one in which each is free to do as she pleases. Your mother cannot control or manage the problem of inflation as inflation is a macroeconomic issue.

However, games are sometimes represented on matrices rather than trees. It will seem that, surely, choosing the safe bridge straight away would be a mistake, since that is just where she will expect you, and your chances of death rise to certainty.

This includes looking at variables like unemployment, GDP and inflation. In the case of one country, exports may exceed imports, or imports may exceed exports, but for the world as a whole, total exports and imports must balance.

Consider another example from Krepsp. The law of demand states that, in general, price and quantity demanded in a given market are inversely related. Micro principles are used in macro economics. Even a quite brave soldier may prefer to run rather than heroically, but pointlessly, die trying to stem the oncoming tide all by himself.

Helpful in Understanding the Problems of Taxation: He took care to burn his ships very visibly, so that the Aztecs would be sure to see what he had done. IN THE COMPETITION APPEAL COURT. OF SOUTH AFRICA. In the matter between: Case No: 70/CAC/Apr07 Mittal Steel South Africa Limited 1 st Appellant.

Macsteel International BV 2 nd Appellant.

Why digital strategies fail

Macsteel Holdings (Pty) Limited 3 rd Appellant. and. Economics (/ ɛ k ə ˈ n ɒ m ɪ k s, iː k ə-/) is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work.

Microeconomics analyzes basic elements in the economy, including individual. Definition: Microeconomics is the study of individuals, households and firms' behavior in decision making and allocation of resources.

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It generally applies to markets of goods and services and deals with individual and economic issues. Module directory The Module Directory provides information on all taught modules offered by Queen Mary during the academic year Microeconomics is the branch of economics that analyzes market behavior of individuals and firms in order to understand their decision-making process.

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A description of microeconomics and its importance in the whole economy
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Game Theory (Stanford Encyclopedia of Philosophy)