Origin:

The term economics was derived from the Greek words oikos meaning house and nomos
meaning managing, thus the original definition of economics was household management.
Economics
Applied Theoretical

Normative Positive

Mathematical Macro Micro

Definition of Economics:
Economics is a social science, which analyzes production, consumption, distribution of goods
and services with theory and management.
What is of Microeconomics? Meaning & Definition
Micro means small. Thus, micro economics analyses individualistic behavior. It studies an
individual consumer, producer, price of a particular commodity, household, etc.
According to Prof. K. E. Boulding, "Micro Economics is the study of particular firm, particular
household, individual prices, wages, incomes, individual industries and particular commodities."

Scope of Microeconomics
Microeconomics is considered to be the basic economics.
Microeconomics is the branch of economics that deals with how individuals and organizations
make decisions about allocation of scarce resources and how these individuals and organizations,
interacting in markets, determine relative prices, wages, and rents.

Individual Behavior Analysis:
Micro economics studies behavior of individual consumer or producer in a particular situation.
Foreign Trade:
It helps in explaining and fixing international trade and tariff rules, causes of disequilibrium in
BOP, effects of factors deciding exchange rate, etc.
Price Mechanization:
Micro economics decides prices of various goods and services on the basis of 'Demand-Supply
Analysis'.
Resource Allocation:
Resources are already scare i.e less in quantity. Micro economics helps in proper allocation and
utilization of resources to produce various types of goods and services.

MICROECONOMICS
is about
Buying decisions of the individual
Buying and selling decisions of the firm
The determination of prices and in markets
The quantity, quality and variety of products
Profits
Consumers satisfaction
Micro Economics Theory

Commodity Pricing Factor Pricing Theory of economic Welfare

Demand Theory Supply Theory Rent
Wages
Interest
Profit

What to Produce? How to produce? When to Produce? For whom it is to be Produce?

1. Commodity Pricing:
Prices of individual commodities are determined by market forces of demand and supply. So
micro economics makes demand analysis (individual consumer behavior) and supply analysis
(individual producer behavior).
2. Factor Pricing:
Land, labor, capital and entrepreneur, all factors contribute in production process. So they get
rewards in the form of rent, wages, interest and profit respectively. Micro economics deals with
determination of such rewards i.e. factor prices. So micro economics is also called as 'Price
Theory' or 'Value Theory'.
3. Welfare Theory:
Micro economics deals with optimum allocation of available resources and maximization of
social welfare. It provides answers for 'What to produce?', 'When to produce?', 'How to produce?'
and 'for whom it is to be produced? In short, Micro economics guides for utilizing scarce
resources of economy to maximize public welfare.
Some Examples of Microeconomics:
An individual consumer
A single firm
Demand for single product
Supply for single product
Price of a single product
Income of an individual consumer