Concept Micro-Economics
The word ‘Micro’ was derived from Greek ‘Mikros’ which means small .So the term micro denotes small . Hence ,micro economics is the study of the behavior of individual units . It studies how a particular firm maximizes profit or how an individual consumer maximizes satisfaction from his purchase .
According to K.E Boulding Micro economics is the study of particular firms ,particular house holds individual prices ,wages, income ,individual industries ,particular commodities .
In the words of Edward Shapiro “Microeconomics “is a condemned not with total output total employment or total spending but with output of particular goods and services by single firms or industries and with the spending on particular goods service by single households in the single market .
In microeconomics , the unit of study is the part rather than the whole . It studies the small components of national economy . The study is concentrated on particular unit ,not the aggregate of all units for example , Micro economics explains how the single firms determines the price for a particular product , that amount of output will maximize its profit . It also seeks to explain how the individual consumer distributes his total expenditure among various goods and services so as to maximize utility .
In the conclusion , micro economics studies the individual units , not the economy as a whole .According to A.P Lerner .Microeconomics consists of looking economy through a microscope . Micro economics is concerned with the pricing of goods and services as well as with the price of factors of production such as land ,labour , and capital . Hence ,it is also known as price theory . Therefore microeconomics is the first branch of economics . It studies about individual units . Price and output are determined by demand and supply of forces in the market . Micro economics is called price theory.