Microeconomy
Microeconomy focuses mainly in the behavior of people and the individual companies in the decisions they make. In this part of the site, we are going to assume that all the decisions individuals make and the decisions that companies make is due to that they are searching out for to maximize the benefits. The nice fact, even though surprising, is that in the context of the competitive markets, the companies that look for benefits and the individuals that look for happiness end up using society’s limited resources in the most efficient way possible, in other words the competitive markets that work well produce the best combination of goods and services with these limited resources. The markets, however, are not always well established, so we are also going to be getting into the subject of monopolies and market failure to shoe what occurs when things go wrong and how they can be fixed.
Simplified Supply and Demand
The model of supply and demand of the markets is the most famous contribution of the economic science that is known to humankind. This model has become famous because it is useful in many ways, since it illustrates with a lot of precision how the markets determine the prices and assign the resources, make it possible to formulate exact predictions about the way government polices affect the behavior of the markets.
For example the model of microeconomy can show and tell why the price of gasoline increases during summer and why the price of wheat goes down after a good harvest. It can also correctly perceive that the subsidies of the agricultural prices cause a super production of foods and that leasing control leads to scarcity of places to live in.
If you only have time to learn about one thing that has to do with economy, you should definitely consider having that aspect be about supply and demand. After finding out about it you not only will be able to understand it but will have a new perception about almost everything you have read before in relation to the commerce, business and politics.
However, don’t get too excited now, the mode of the supply and demand is a model of how the markets work, however, not everything in life is a market. Economy has acquired a bad reputation because sometimes it seems that economists try to explain everything by using supply and demand.
We are going to start out by filling you in on some market knowledge and then explain supply and demand individually.
|
