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Microeconomics deals with the behaviour of consumers and firms. It is highly focused on determining the choices and decisions made by individuals regarding resource utilization and allocation rather than the whole economy.

Microeconomics addresses all the economic and consumer-related concerns. It studies the coordination and cooperation of business and individuals in a detailed manner using various mathematical techniques in order to identify the effect of coordination on supply, demand and price. The power of microeconomics relies upon its simplicity and its close association with the real world.

The model of microeconomics is developed on individuals and then later tilts towards interpersonal relationships. Demand and supply are the tools used for analysis in microeconomics to understand the decisions of individual units in the economy. Since it deals with every single entity, microeconomic analysis is essential before understanding the entire economy of a country.


Microeconomic analysis can be categorized into three types as below:

Micro Statistic Analysis Assignment Help:

In this type of microeconomic analysis, the equilibrium point of the variables of microeconomics is attained at a fixed duration of time. The equilibrium level of a market is determined by two principle variables, demand and supply. The demand and supply of a commodity are related to the cost of the commodity at a particular time period. Thus micro statistic analysis tries to gauge the relationship between demand and supply at a particular time period.

Micro Comparative Static Analysis Assignment Help:

In this type of microeconomic analysis, two micro statistic points are compared at different intervals of time. The variables are compared at two or more equilibrium points without considering the transitional period and process of adjustment.

Micro Dynamic Analysis Assignment Help:

Micro dynamic analysis explains how a change occurs between original or initial equilibrium and new equilibrium. It deals with the process of adjustment, activities carried out by the variables while adjusting from one equilibrium point to another, and time path. Certain fundamental principles are laid out by microeconomics to understand the behaviour of individuals in every particular situation. Lets delve into the basic principles and features of microeconomics.


Maximizing Utility: The purchase decision of a consumer is based on their objective to maximize their utility and happiness.

Opportunity Cost: When a purchase decision is made, the cost of forgoing the next best alternative is also calculated.

Diminishing Marginal Utility: Diminishing marginal utility is another major concept of microeconomics, which states that with the increase in the quantity of consumption, the satisfaction level reduces.

Supply and Demand: The demand and supply concept of microeconomics deals with the association between the number of services or goods that are produced and sold to the number of goods that are bought by the consumers at that particular price.


Diminishing Marginal Utility: As per the law of diminishing marginal utility, the higher number of products being consumed reduces the marginal benefits of a consumer and ultimately the customer is destined to pay less. For any business unit, the highest benefit is generated by the first unit of a commodity as it tends to satisfy the immediate desire or needs, which then diminishes simultaneously.

Diminishing Returns and Supply: Price elasticity of demand states that a change in the price of a commodity will ultimately change the consumption of the same commodity. Elasticity of demand is used by microeconomists to understand the change in supply and demand of a product with change in price.

Price Elasticity of Demand = % change in quantity demand/ % change in price.

Price Elasticity of Supply: Price elasticity of supply is used to measure the change in the quantity of a commodity supplied by a firm with the change in price. Generally with the hike in price the supply of the commodity increases whereas it decreases with the reduction in price.

Price Elasticity of Supply= % change in supply/ % change in price.

MARKET STRUCTURE: Various factors determine the market structure including number of consumers and producers in a market, how the market shares are distributed among them and whether entering and leaving the market is convenient.

The different market structures include:

Monopoly: Monopoly is a market structure where there is only one supplier of a particular goods or service.

Examples of Monopoly: Microsoft Windows, Google

Duopoly: In a duopoly market structure, the market is under the control of two firms.

Examples of Duopoly are: Mastercard & Visa.

Perfect Competition: In a perfect competition, there are many buyers & sellers of a commodity and the market is not under the control of any single individual or firm.

Examples of Perfect Competition are agriculture markets, foreign exchange markets etc.

Monopolistic Competition: In a monopolistic competition, many firms produce similar products but these products are not the perfect substitutes.

Examples of Monopolistic Competition are: footwear, clothing, restaurants etc.

Oligopoly: In an oligopoly structure the entire market is controlled by few companies, the competition and collaboration between these firms determine price.

Examples of Oligopoly are: film & tv insustry, mass media, smartphone Operating Systems like Apple IOS, Android.

Monopsony: In a monopsony, the demand for products is controlled by only one buyer.

Examples of Monopsony: Labor market

Oligopsony: As per oligopsony, the entire power is with the buyers and they control the entire market.

Examples of Oligopsony: The US Fast food market.


Utility Theory: It deals with household behaviour and is constructed on the concept of utility. Utility function determines the consumption of an individual, wherein the happiness of an individual is dependent on their consumption. The utility function is guarded by the budget of an individual to determine their uptake. But individuals always try to maximize their utility, hence opting for the optimal number of products in a given budget.

Producer Theory: It considers the behavior of firms, viewing them as entities that are determined to turn inputs into outputs by using appropriate technologies. The production capacity of a firm is dependent on the input prices, availability of raw materials and level of technologies used for production. The ultimate aim of any firm is to maximize its profits while aligning with all other constraints.

Price Theory: In this particular theory of microeconomics, the price of every single commodity is determined by aligning the demand and supply curve. Price theory also helps in the estimation of market structure as well as the behavior of consumers.

Consumer Demand Theory: The demand of any commodity is determined by three significant factors. Consumers buying action is dependent on the cost of the product, the lower will be the price the higher will be the purchase and ultimately demand will increase. Demand of a product is also dependent on the income of the consumers.

Supply Theory: Profit and cost are the two most important factors that determine the number of products supplied by a firm. Maximizing output tends to yield higher profit. Combining the supplies of all the companies gives out the market supply of a commodity.


Labour Economics: Labor economics is dependent on microeconomics as it is built on analyzing the supply and demand for different types of labour. It also deals with the interaction between firms and laborers in the labour market.

Industrial Organization: It involves all the different mechanisms of selling goods or service. It studies the structure of firms and their operation on different markets in a detailed manner.

International Economics: It deals with the supply and demand of commodities traded by individuals as well as the imports and exports of an entire country.

Agricultural Economics: It deals with the demand and supply of farmlands, agricultural products, farm labour and the other factors of production related to agriculture.


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