{"id":3789,"date":"2021-07-09T15:05:23","date_gmt":"2021-07-09T09:35:23","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=3789"},"modified":"2025-10-07T14:48:35","modified_gmt":"2025-10-07T09:18:35","slug":"importance-of-microeconomics","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/","title":{"rendered":"Importance of Microeconomics | Economics Blogs"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e5982833f2e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e5982833f2e\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/#Importance_of_Microeconomics\" >Importance of Microeconomics<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/#Meaning_of_Microeconomics\" >Meaning of Microeconomics:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/#Definitions_of_Microeconomics\" >Definitions of Microeconomics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/#1_Explain_the_importance_of_Microeconomics_Uses_of_Microeconomics\" >1) Explain the importance of Microeconomics? Uses of Microeconomics.<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Importance_of_Microeconomics\"><\/span>Importance of Microeconomics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Microeconomics\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">Meaning of Microeconomics:<\/mark><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Micro means a small part of a thing. Microeconomics thus deals with a small part of the national economy. It studies the economic actions and behaviour of individual units such as an individual consumer, individual producer or a firm, the price of a particular commodity or a factor, etc.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Definitions_of_Microeconomics\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">Definitions of Microeconomics<\/mark><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>1)Maurice Dobb <\/strong>&#8211; \u201cMicroeconomics is in fact a microscopic study of the economy.\u201d<br><strong>2) Prof A. P. Lerner<\/strong> &#8211; \u201cMicroeconomics consists of looking at the economy through a microscope, as it were, to see how the millions of cells in the body of economy \u2013 the  individuals or households as consumers and individuals or firms as producers play their part in the working of the whole economic organism.\u201d The following chart gives an idea of the scope of microeconomics.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/microeconomic-definition\/\" target=\"_blank\" rel=\"noreferrer noopener\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/microeconomic-definition\/\"><strong>Microeconomic Definition | Historical Review of Microeconomics<\/strong><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/scope-of-microeconomics\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/scope-of-microeconomics\/\" rel=\"noreferrer noopener\"><strong>Scope Or Nature of Microeconomics<\/strong><\/a><\/li>\n\n\n\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/features-of-microeconomics\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/features-of-microeconomics\/\" rel=\"noreferrer noopener\">Features of Microeconomics<\/a><\/strong><\/li>\n\n\n\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/importance-of-microeconomics\/\" rel=\"noreferrer noopener\">Importance of Microeconomics<\/a><\/strong><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Explain_the_importance_of_Microeconomics_Uses_of_Microeconomics\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>1) Explain the importance of Microeconomics<\/strong>?<br><\/mark>Uses of Microeconomics.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Following are the importance of Microeconomics :<br><\/strong><span class=\"has-inline-color has-vivid-purple-color\"><strong>i) Price Determination: <\/strong><br><\/span>Microeconomics explains how the prices of different products and various factors of production are determined.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">ii) Free Market Economy: <br><\/span><\/strong>Microeconomics helps in understanding the working of a free market economy. A free-market economy is that economy where the economic decisions regarding the production of goods, such as \u2018What to produce?, How much to produce?, How to produce? etc.\u2019 are taken at individual levels. There is no intervention by the Government or any other agency.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>iii) Foreign Trade:<\/strong> <br><\/mark>Microeconomics helps in explaining various aspects of foreign trade like effects of a tariff on a particular commodity, determination of currency exchange rates of any two countries, gains from international trade to a particular country, etc.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>iv) Economic Model Building:<\/strong> <br><\/mark>Microeconomics helps in understanding various complex economic situations with the help of economic models. It has made a valuable contribution to economics by developing various terms, concepts, terminologies, tools of economic analysis, etc. Economic models are built using various economic variables.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>v) Business Decisions:<\/strong> <br><\/mark>Microeconomic theories are helpful to businessmen for taking crucial business decisions. These decisions are related to the determination of cost of production, determination of<br>prices of goods, maximization of output and profit, etc.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>vi) Useful to Government<\/strong>: <br><\/mark>It is useful to the government in framing economic policies such as taxation policy, public expenditure policy, price policy, etc. These policies help the government to attain its goals of efficient allocation of resources and promoting the economic welfare of the society.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>vii) Basis of Welfare Economics:<\/strong> <br><\/mark>Microeconomics explains how the best results can be obtained through the optimum utilization of resources and their best allocation. It also studies how taxes affect social welfare.<\/p>\n\n\n\n<p>Thus, microeconomics has many theoretical and practical importance as well as uses.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/importance-of-law-of-diminishing-marginal-utility\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/importance-of-law-of-diminishing-marginal-utility\/\" rel=\"noreferrer noopener\">Importance of Law of Diminishing Marginal Utility<\/a><\/strong><\/li>\n\n\n\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/utility-in-economics-meaning-concepts\/\" rel=\"noreferrer noopener\">Utility in Economics ( Concepts of Utility )<\/a><\/strong><\/li>\n\n\n\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/features-of-utility\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/features-of-utility\/\" rel=\"noreferrer noopener\">Features of Utility<\/a><\/strong><\/li>\n\n\n\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/types-of-utility\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/types-of-utility\/\" target=\"_blank\" rel=\"noreferrer noopener\">Types of Utility<\/a><\/strong><\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/rb.gy\/c9pmbq\" data-type=\"link\" data-id=\"https:\/\/rb.gy\/c9pmbq\" target=\"_blank\" rel=\"noopener\">Issue of Shares<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/rb.gy\/3f7zhl\" data-type=\"link\" data-id=\"https:\/\/rb.gy\/3f7zhl\" target=\"_blank\" rel=\"noopener\">Bills of Exchange<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/rb.gy\/v5flhj\" target=\"_blank\" rel=\"noopener\">Dissolution of Partnership Firm<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/rb.gy\/jpjgd8\" data-type=\"link\" data-id=\"https:\/\/rb.gy\/jpjgd8\" target=\"_blank\" rel=\"noopener\">NPO<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/rb.gy\/nhy2xy\" data-type=\"link\" data-id=\"https:\/\/rb.gy\/nhy2xy\" target=\"_blank\" rel=\"noopener\">Analysis of Financial Statement<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/rb.gy\/nhy2xy\" data-type=\"link\" data-id=\"https:\/\/rb.gy\/nhy2xy\" target=\"_blank\" rel=\"noopener\">Admission of Partner<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":3796,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[1832],"class_list":["post-3789","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-misc","tag-importance-of-microeconomics-2"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=3789"}],"version-history":[{"count":3,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3789\/revisions"}],"predecessor-version":[{"id":39067,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/3789\/revisions\/39067"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/3796"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=3789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=3789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=3789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}