Micro Economics is also known as price theory, give the reason.
Answers
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Here's your answer:
It is known as price theory because it examines how the prices of various products are determined.
The product pricing explains how the relative prices of house, car ,rice, sugar & thousands of other commodities are determined.
Price of the commodity depends upon the forces of demand & supply.
Demand side covers the consumer behavior & supply side covers the producers behavior.
Microeconomics also deals with the factor pricing that is rent, wages, interest & profits for the LAND, LABOR, CAPITAL & ENTERPRISE.
How micro-economics also called price theory:
Reason:
In Microeconomics, we deal with how prices of goods and facilities are determined in product market and how prices of factors of manufacture are determined in the feature market. Philosophies which explain market price determination are known as price theories and are one of the important mechanisms of microeconomics. Hence, microeconomics is also known as price theory.
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