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Microeconomics

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Importance of microeconomics in Academic Curriculum

Micro means small. Thus micro economics analyses individualistic behavior. It studies individual consumer, producer, price of a particular commodity, household etc.

Micro economics plays a very important role in our daily life. It occupies the most important place in economic theory. It has both theoretical and practical importance. It helps in the explanation of functioning of a free enterprise economy from the theoretical aspect. It also helps to solve the central problems of economy which are related to allocation of resources which includes problems like what to produce, how to produce and for whom to produce. Decisions regarding 'what', 'how' and 'for whom' to produce are decided on the basis of price mechanism. Goods are freely bought and sold in the market economy on the agreed price.

From the practical aspects, it helps in the formulation of policies calculated to promote efficiency in the product and the masses. Thus positive and normative science tells us about the operation of the economy and how we relate the operations with public welfare.

Microeconomics helps in analyzing individual consumer or producer's behavior in a particular situation. Micro economics helps in price mechanization, policy formulation, resources allocation which leads to social and public welfare.

Difficulties Faced By the Students While Solving Microeconomics Problems:-

Students face maximum problems in concepts of consumer theory: preferences, utility functions, marginal rate of substitution, budget set, demand functions, consumer surplus. Students also have to suffer problems in making graphs related to every topic. The topic of demand and supply creates a lot of confusions in students mind. There are lots of stages of equilibrium in economics included in the topics of consumer and producer equilibrium, these concepts creates lot of confusions in student's mind. Formulas and numerical problems of utilities are interrelated as well forms of markets specially evaluation of the consequences alternative regulatory policies in competitive and monopolistic markets (price controls, quotas, taxes and subsidies, tariffs) are very confusing and students face many difficulties in these kinds of problems. Concepts of uncertainty and risk, attraction and aversion to risk, risk premium, use and value of information. While learning the basic concepts of the Theory of the Firm like inputs and outputs, production function, opportunity cost, sunk costs, fixed and variable cost, total, average and marginal cost, short and long run costs, supply function students face many problems as these topics are quite similar to one another.

Few Microeconomics Topics Which Required an Assistance to Solve Problems

Students should be clear about the fact that microeconomics is study of individual consumer, firm, household etc.

Secondly the concept of demand and supply should be clear: 'The law of demand states that there is an inverse relationship between price and demand, if the price of a commodity increases its demand decreases and vice versa' and 'The law of supply states that there is a positive relation between price and supply, if the price of a commodity increases its supply also increases and vice versa'.                                                  

Relationships between TP & MP should be clear as well as relationships between TC, AC & MC and TR, MR  & AR should also be very clear so that graphs can be easily made as well as equilibrium conditions of long run and short run can be easily learnt.

Forms of market and all the factors that effects market should be clearly specified so that learning can become much easier.

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