Microeconomics is a branch of economics that studies the behavior of individuals and firms in markets. It is concerned with how individuals make decisions about how to allocate their limited resources, how firms make decisions about how to produce and sell goods and services, and how markets interact to determine prices and quantities.
Microeconomics is a foundational course in economics. It provides students with the tools they need to understand how markets work and how government policies can affect the economy.
Here are some of the benefits of studying microeconomics:
If you are interested in learning more about economics, microeconomics is a pleasant subject to start. It is a foundational course that will provide you with the tools you need to understand how markets work and how government policies can affect the economy.
Measurement of the Elasticity of Demand The measurement of elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price. There are three methods of measuring the elasticity of demand which are as follows Total Outlay Method Proportionate or Percentage Method Point Method or Geometrical Method
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Factors Determining the Elasticity of Demand The demand for a commodity is more elastic and that of the other commodity is less elastic, this usually depends on several factors. It is important to note that the elasticity of demand for a product can change over time. For example, the demand for smartphones has become more
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Classification of Elasticity The Elasticity of Demand could be of 3 types based on the factor which affects the change in the demand for a commodity. Price Elasticity of Demand Income Elasticity of Demand Cross Elasticity of Demand Measurement of the Elasticity Total Outlay Method Proportionate or Percentage Method Point Method or Geometrical Method
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Meaning of the Elasticity of Demand The Elasticity of Demand is related to the Law of Demand, it is the measure of the change in the demand of a commodity with respect to the change in the price of the commodity. In simple words, elasticity of demand refers to an increase or decrease in demand,
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Exceptions to The Law of Demand From the analysis of The Law of Demand, it is clear that in ordinary conditions, demand increases on decrease in price of a commodity and the demand curve falls downwards from left to right. But there are some exceptions to the law of demand and sometimes, even on decrease
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Definition of The Law of Demand The law of demand states that other things remain the same, a decrease in prices causes an increase in demand and an increase in prices causes a decrease in demand. This law is based on The Law of Diminishing Utility which states that as we keep purchasing a commodity its
Importance of Law of Equi-Marginal Utility The Law of Equi-Marginal Utility has an important place in economics. The importance of concept cannot be ignored even though it is highly criticized. This applies in every field of economics, which is clear from the following
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Criticism, Limitations and Exceptions of The Law of Equi-Marginal Utility Following are the main reasons for the criticism of the Law of Equi-marginal utility by H. H. Gossen. Although, it is a basic law of economics and consumers knowingly or unknowingly are compelled, to follow this law. This law is applicable in every field of
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Law of Equi-Marginal Utility The Law of “Equi-marginal utility” is helpful in maximizing the utility of a consumer. We know that the wants of every man are unlimited. Wants to arise again and again but man has limited means (income) to fulfil his wants and means have alternative uses. Thus, man always faces the problem
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Measurement of Utility The utility is a Psychological and Personal Concept. There is a difference of opinion, on whether measurement of utility can be done or not. The followings are the two approaches prevalent in this regard.
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