Economics influences our everyday lives whether we realize it or not. Even our decision to work or rest is guided by economic principles.
Microeconomics is a high study branch of economics that has several components such as supply and demand. For the benefit of those new to economics as a subject, we will define economics with a focus on making choices in a world of scarce resources then move onto supply, demand, and equilibrium and their application in the market for labor and finance. We will use supply and demand diagrams to analyze the impact of overall changes in supply and demand on price and quantity.
Microeconomics studies the behavior of individuals and businesses and how decisions are made based on the allocation of limited resources. It is the study of how we make decisions because we know we don’t have all the money and time in the world to purchase and do everything. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services which determine the prices we pay. These prices in turn determine the number of goods supplied by businesses and the number of goods demanded by consumers.
Microeconomics helps us determine how families determine what goods to buy and how much to save. It also determines the number of goods a manufacturer may decide to make and what prices to sell, as well as how competitive different industries are and how that affects consumers.
Microeconomics must not be confused with macroeconomics which is the study of economy-wide things such as growth (GDP), inflation, and unemployment. This course focuses on microeconomic theory and how it affects policy decisions. We introduce concepts and analysis, such as theories of the firm (producer theory) showing how the level of competition between firms depends on the market structure and the level of market regulation or artificial price distortions by government interventions. This may happen when subsidies to certain businesses or industries such as agriculture of fuel distort through market prices of the communities on the market.
We look at individual behavior (consumer theory) and the factors that may influence consumer decisions. What is market failure and why does it occur? What can government do to curb pollution? Would a carbon tax work? How do welfare economies differ from non-welfare economies? We will see how individual markets work such as the labor market and goods market. We study market structures looking at competition and monopoly.
This course will ensure that you can relate fundamental microeconomic theory with daily economic activity. You will develop critical thinking skills by considering the case of market failure which occurs in sharp contrast to traditional microeconomic theory.
Students will learn that despite the notion that supply and demand are determined by the market, there are cases of missing markets where government intervention is required to substitute for the price mechanism. You will be able to use the knowledge gained on this course to everyday circumstances and be able to apply this knowledge in other related subjects.