Question

Write a short note on Importance of Micro Economics

Answer 1

1. Individual Behaviour Analysis


Micro economics studies behaviour of individual consumer or producer in a particular situation.


2. Resource Allocation


Resources are already scare i.e less in quantity. Micro economics helps in proper allocation and utilization of resources to produce various types of goods and services.


3. Price Mechanization


Micro economics decides prices of various goods and services on the basis of 'Demand-Supply Analysis'.


4. Economic Policy


Micro economics helps in formulating various economic policies and economic plans to promote all round economic development.


5. Free Enterprise Economy


Micro economics explain operating of a free enterprise economy where individual has freedom to take his own economic decisions.


6. Public Finance


It helps the government in fixing the tax rate and the type of tax as well as the amount of tax to be charged to the buyer and the seller.


7. Foreign Trade


It helps in explaining and fixing international trade and tariff rules, causes of disequilibrium in BOP, effects of factors deciding exchange rate, etc.


8. Social Welfare


It not only analyse economic conditions but also studies the social needs under different market conditions like monopoly, oligopoly, etc.

Answer 2

Importance of micro-economics:

• Microeconomics gives the ways for proper distribution of money on different goods and services so that they can get extreme utility.

• It is very important method of economic analysis.

• Micro-economics is helpful in the development of economic trades.

• It is important to firms, consumers and also business.

• Micro-economics helps us to understand how seamlessly rational decision makers would make selections.

Hope it helped.......