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Importance of Micro Economics

Microeconomics is the study of individual consumers, firms, and markets. It examines how consumer behavior and demand, supply factors, and different market structures like perfect competition influence price determination. Microeconomics is important for understanding how a market economy functions, aiding business planning and policymaking. Key concepts include demand and supply analysis, consumer utility, market equilibrium price, and different market forms like monopoly and oligopoly. The document provides an overview of these microeconomics concepts and their importance.

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Kinjal Hakani
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2K views21 pages

Importance of Micro Economics

Microeconomics is the study of individual consumers, firms, and markets. It examines how consumer behavior and demand, supply factors, and different market structures like perfect competition influence price determination. Microeconomics is important for understanding how a market economy functions, aiding business planning and policymaking. Key concepts include demand and supply analysis, consumer utility, market equilibrium price, and different market forms like monopoly and oligopoly. The document provides an overview of these microeconomics concepts and their importance.

Uploaded by

Kinjal Hakani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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IMPORTANCE OF MICRO ECONOMICS IN BUSSINESS

GROUP MEMBERS: UMANG SANGHAVI


JASH HAKANI GAURAV PANDEY

GAURANG KHUNT
JAYESH UTTEKAR JAY KARELIA PRITESH PASAD

CONTENTS

IMPORTANCE OF MICRO ECONOMICS CONSUMER BEHAVIOUR DEMAND ANALYSIS SUPPLY ANALYSIS

MARKET FORMS
EQUILIBRIUM PRICE

Define Micro Economics?


Micro economics is the study of particular firms, particular house holds, wages, incomes and particular commodities

Features

Economic model Microscopic overview Assumption Pricing theory

Individual analysis
Marginal analysis

Importance
Working Price

of a free market economy

determination policies

Economics Helps

in business planning

International
Social

trade

welfare

Limitations

Unrealistic assumptions
Wrong conclusion Pure capitalism

Consumer behavior
Consumer

behavior is a study of individuals groups or organizations and the processes they use to select secure and dispose of products, services ,experiences to satisfy needs of consumer and society.

Utility means want satisfying power of a commodity .

Types of utility:
Form

Utility

Possession

Utility

Time

Utility

Service

Utility

Place

Utility

Knowledge

Utility

Features of utility
Utility

Is A Subjective Term

Utility
Utility Utility Utility Utility

Is A Relative Term
Is Multipurpose Is Different From Satisfaction Is Different From Usefulness Is Different From Pleasure

Demand analysis
Demand in economics refers to desire for a commodity backed by ability to pay and willingness to buy that commodity

Demand= desire + ability +willingness

Types of demand

Direct Demand Indirect Demand Individual Demand Market Demand Joint & Complimentary Composite Demand

Factors affecting on demand


Price

of the product of buyers & population growth level & tax structure & festival

Number Taxation

Customs

Innovation Standard

of living

Supply Analysis
The term Supply means quantity of the commodity that a firm is willing and able to sell at a given price per unit of time

Factors affecting on market supply


Technology Cost

adoption

of production

Foreign Self

trade policy

consumption condition

Natural Price

of a product

Market forms
Market is a commercial place where there are
large number of buyers and large number of sellers comes into close contacts directly or indirectly to transact there goods.

Types of market
Perfect

competition competition

Monopolistic

Oligopoly
Duopoly Monopoly

PERFECT AND PURE COMPETITION

Perfect competition is a market

Pure competition is a market

situation where there are large


numbers of buyer and sellers and single uniform price is determined by the forces of total demand and total supply .

situation

where there is no

monopoly at all

Homogeneous product

Large number of buyers &

Freedom of entry & exit


Perfect knowledge Perfect mobility

sellers
Homogeneous product Freedom of entry & exit

Equilibrium price
The Equilibrium Price is the price where the total demand is exactly equal to total supply. The equilibrium price is the single price which prevails in the market and the buyer and the seller has to accept it.

Elements of market equilibrium

Market Period
Short Run Period Long Run Period

Conclusion

Micro economics is selective in nature .

It analyses the behavior of the individual


buyer and seller .

Deals with the problem connected with the


determination of prices of various commodities , factors of production and problem related to allocation of resources .

Thank you

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