HSEB Notes on Micro Economics
Class : 11
The term micro economics means small. Hence microeconomics deals with a small part or small component of national economy. According to K.E. Boulding, “Micro Economics is the study of particular form, particular household, individual price, wages, income of industry and commodities. Therefore, micro economics theory studies the behavior of individual decision making unit such as business firm, industry; determine the price of the goods and services. It also study how business firm minimized its cost and output. On the other side, it also explains how the individual consumer distributes his total income on different services to maximize his utility of satisfaction. Hence, micro economics never studies the economy as a whole. It is also called price theory.
Scope of Micro economics
Theory of product pricing
Micro economics studies the prices of different markets. Markets are perfect competition of price of goods and services studied in micro economics.
Factor pricing
Micro economics also studies the pricing of factor of production means land, labor, capital and organization. They get returns in the form of wages, rent interest and profit.
Theory of welfare
Welfare is an important component of micro economics. Here we study how economic efficiency maximized peoples welfare. The efficiency in production, distribution, consumption increases the welfare.
Allocation of Resources:
Micro economics also studies the allocation of resources. It says how to produce and what to produce and which to produce
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