what is microeconomics 
microeconomics is the social science that studies the implications of incentives and decisions and how they affect the utilization and distribution of resources on an individual level microeconomics shows how and why different goods have different values it addresses how individuals and businesses conduct and benefit from efficient production and exchange and how individuals can best coordinate and cooperate with each other microeconomics provides a more detailed understanding of individuals firms and markets macroeconomics provides a more aggregate view of economies investopedia tara anandunderstanding microeconomicsmicroeconomics is the study of what s likely to happen when individuals make choices in response to changes in incentives prices resources or methods of production these scenarios are also known as tendencies individuals are often grouped into microeconomic subgroups such as buyers sellers and business owners these groups create the supply and demand for resources using money and interest rates as pricing mechanisms for coordination 1the uses of microeconomicsmicroeconomics can be applied in a positive or normative sense positive microeconomics describes economic behavior and explains what to expect if certain conditions change it theorizes that consumers will tend to buy fewer cars than before if a manufacturer raises the prices of cars the price of copper will tend to increase if a major copper mine collapses in south america because supply is restricted positive microeconomics could help an investor see why apple inc aapl stock prices might fall if consumers buy fewer iphones it could also explain why a higher minimum wage might force the wendy s company wen to hire fewer workers these explanations conclusions and predictions of positive microeconomics can then be applied normatively to prescribe what people businesses and governments should do to attain the most valuable or beneficial patterns of production exchange and consumption among market participants this extension of the implications of microeconomics from what is to what ought to be or what people ought to do also requires at least the implicit application of some sort of ethical or moral theory or principles and some form of utilitarianism method of microeconomicsmicroeconomic study has historically been performed according to general equilibrium theory developed by l on walras in elements of pure economics and partial equilibrium theory introduced by alfred marshall in principles of economics 2the marshallian and walrasian methods fall under the larger umbrella of neoclassical microeconomics neoclassical economics focuses on how consumers and producers make rational choices to maximize their economic well being subject to the constraints of how much income and resources they have available neoclassical economists make simplifying assumptions about markets such as perfect knowledge infinite numbers of buyers and sellers homogeneous goods or static variable relationships to construct mathematical models of economic behavior these methods attempt to represent human behavior in functional mathematical language this allows economists to develop mathematically testable models of individual markets neoclassicals believe in constructing measurable hypotheses about economic events and then using empirical evidence to determine which hypotheses work best they follow the logical positivism or logical empiricism branch of philosophy in this way microeconomics applies a range of research methods depending on the question being studied and the behaviors involved basic concepts of microeconomicsthe study of microeconomics involves several key concepts including but not limited to 