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Microeconomics deals with individuals and firm’s earnings, several ways of income, proper budgeting, and proper utilization of limited resources, investment, etc. It shows the way of analysis values of different goods by establishing relative price of those goods. To analyze all reasons behind failure to establish a good market result also one of its motto.
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Main focus
Though microeconomics is a study of individual’s behavioral status in economy it also deals with many other related subject matter such as –
- Product Pricing:
Price of a product is determined by market on the basis of demand of consumers for the product and supply of that product by manufacturer. Microeconomics analysis both demand and supply for proper pricing.
- Pricing for other factors:
In a production, except main ingredients or raw materials, lots of other related factors are being involved. Such as land, office, factory shed labors and employees, etc. This study determines the correct price for these factors through proper analysis
- Establishing economic welfare:
Economy is the backbone of a nation, so economic welfare is a necessary factor for every society. This branch of economics deals with these problems gives proper solution to build an improved and efficient economic structure and enhances public welfare.
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Making important business decisions
Taking a correct decision for an important issue is a quite significant factor in the field of business. A single wrong decision can lead your business to ruin. Microeconomics plays a vital role in making right decision in major business issues like –
- Proper utilization of limited resources
- Right analysis of demand
- Correct cost analysis
- Shows the benefits of free market
- Optimal production decisions
- Correct pricing
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Other importance
Microeconomics analyzes entire mechanism of a market such as demand and supply to establish equilibrium condition in the market. Other important factors where it focuses
- On managerial economics
- On welfare economics
- On public economics
- On foreign business and trades
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