Microeconomics Online Courses

Microeconomics and Macroeconomics constitute the two nodal branches of economics. In Microeconomics, individuals are often categorised as belonging to microeconomic subgroups such as business owners, buyers and sellers. The study of microeconomics is basically an analysis of the tendencies that are supposed to originate when these individual actors make a decision. Changes with reference to incentives, resources and prices of production coupled with production methods are recorded.

Positive microeconomics discusses economic behaviour and what to expect when particular variables change. Positive microeconomics tends to provide insight into a company's sales, productivity and profit based on any recent changes in their manufacturing or marketing strategy.

These insights are then used to prescribe the course of action for these companies or governments to work effectively and undertake measures such that their profits remain intact and the demand chain is sated.

Microeconomics is a branch of social science that looks at how decisions and incentives affect how resources are allocated and used. Microeconomics explains how and why different things have varying values, how people behave and profit from efficient production and trading, and how people may work together and coordinate best.

In general, microeconomics focuses on the issues that affects individual, groups, or organisations as compared to the macroeconomics which focuses on issues affecting the national and global economy.

According to the official definition, microeconomics is the area of economics that examines how people and businesses behave and how decisions are made in light of scarce resources. Microeconomics research demonstrates how households and businesses interact or work together. This contact develops a market for products and services, which significantly impacts product pricing.

A key idea in modern microeconomics is the circular flow of economic activity, which demonstrates how families and businesses interact. The components of the economic activity flow are:

Money flowing to and from homes and businesses as revenue

1. Receiving of goods and services by households

2. Sale of resources under private ownership to companies so they can make products

3. The relationship between business and household spending

4. Microeconomics pays special attention to this relationship and economic activity to monitor total firm output, household income, and total spending

The following examples and circumstances illustrate how to apply the definition of microeconomics:

1. Searching for the best loan interest rates as first-time homebuyers.

2. Customers favour one product over another when making a purchase.

3. Company acquiring capital assets to grow.

4. Two companies are vying for the same market.

5. Customers' demand is declining as a result of rising service costs.

6. Businesses reducing product supply as a result of price hikes.

A subfield of social science known as microeconomics theory focuses on analysing separate, individual economic entities that collectively make up the whole economy. Each individual, family, business, or industry is a separate economic unit. It is the area of economics where the consequences of specific elements and individual decisions are discussed.

The primary focus of microeconomics is on the variables that affect individual economic decisions, the impact of changes in these variables on each decision-maker, and how demand and prices are established in specific markets.

The study of phenomena that affect the entire economy, such as unemployment, GDP (gross domestic product) growth or decline, and inflation, is called macroeconomics, in contrast to microeconomics.

Analysing market processes that set relative prices for goods and services and dividing scarce resources among several possible uses are some of the objectives of microeconomics. It demonstrates the circumstances under which open markets finally result in favourable distributions.

Simply put, it is the study of how people make decisions in light of the fact that they have a certain amount of time and money to spend on things.

Microeconomics also examines market failure, or when markets fail to deliver useful and efficient outcomes.

Microeconomics is defined as follows in the Financial Times' glossary of business terms:

“The study of trends that pertain to the different elements (companies, industries, consumers, etc.) that make up the economy.”

Supply And Demand:

Over time, when demand outpaces supply, suppliers either increase their supply or raise their pricing. In an ideal world, demand would decline as prices rose since fewer people could afford it. By doing this, providers buy themselves some time to resume meeting demand. In contrast, suppliers would have to reduce their supply or lower the pricing of the goods offered if supply rose faster than demand. Keep in mind that manufacturers currently have an excess of stock. So as prices decline, demand would increase, and the supply would balance out. Finally, equilibrium is reached when supply and demand are at their best. The relationship between supply and demand and the equilibrium condition presupposes that all other variables, outside price and demand, remain constant.

Opportunity Cost:

A consumer who also makes decisions has a finite amount of money and an infinite number of ways to spend that money. The opportunity cost is the price a buyer pays for not selecting the optimal option. This presumes that the options are exclusive of one another.

It's a chance that a decision-maker passes up. If a commuter takes train to work instead of driving. The train takes 70 minutes and the driving takes 40 minutes. The opportunity cost would be the hour that will be spent elsewhere each day.

Law of Decreasing Marginal Utility

The utility of consumers is maximised by using this microeconomics approach. Diminishing marginal utility is very important in determining what people will buy. This law emphasizes how the demand for specific goods declines when a customer consumes more units in a row. For instance, a person might purchase some ice cream, eat it, and then purchase more. Finally, after consuming three ice creams, he decides he no longer wants them and quits buying them.

Giffen Goods:

Giffen products are essentials whose price increases have no impact on sales; this is a part of advanced microeconomics. Giffen products are distinctive due to the price and demand relationship. These are likely logical choices where the purchasers are prepared to spend more despite price hype. These extraordinary items are called "Giffen goods," with a positively sloping demand curve. For instance, a rise in gasoline prices does not result in a decrease in demand. Products that want to be categorised as Giffen Goods need to meet some of the requirements listed below:

• A lack of available alternatives.
• The replacement should be subpar.

A significant amount of the customer's budget should go toward purchasing the goods.

Veblen Goods:

Giffen goods are comparable to Veblen goods. These items are regarded as a sign of status, esteem, or luxury. Consumers don't mind shelling out more money for these products. Typical examples are jewellery, jewels, and Rolls Royce vehicles are the greater costs. The more expensive something is, the more eagerly people will buy it.

Elasticity And Income:

The demand for more expensive things rises along with income. Additionally, as income declines, so does demand. Alternatively, as the cost decreases, customers can purchase more products. The customer's purchasing power increases in both scenarios. On the other hand, the products of Giffen and Veblen are illustrations of inelastic pricing demand.

Elasticity And Substitution:

Substitution effect: People may select a less expensive option when prices are greater than they can afford. The price elasticity of demand refers to this phenomenon of changing demand due to price.

For instance, if leather jacket prices increase, people will buy woollen overcoats instead to keep warm in the winter.

Opportunity cost is the advantage that was lost because a particular option was not selected. It is necessary to weigh each choice's advantages and disadvantages to assess opportunity costs correctly. Opportunity costs have a value that can help people and businesses make more lucrative decisions. Opportunity cost is a wholly internal expense that is only utilised for strategic consideration; it is not included in accounting profit and is not reported externally.

Opportunity cost examples include choosing to build a new manufacturing facility in Los Angeles as opposed to Mexico City, forgoing an equipment upgrade, or selecting the most expensive product packaging over less expensive alternatives.An opportunity cost is just the difference between the expected returns of each choice, and this is the formula for doing so.

Formula and Calculation of Opportunity CostOpportunity Cost=FO−CO Where: FO=Return on best-forgone optionCO=Return to the chosen option. Most day-to-day decisions aren't made with a complete grasp of the potential opportunity costs. Still, before making major decisions like buying a home or establishing a business, you will probably meticulously investigate your financial decision's advantages and disadvantages.

For instance, many people would check the balance in their savings account before making a purchase when they feel cautious. But when people make that spending choice, they frequently don't consider the items they have to give up.

The issue arises when you never think about what else you could do with your money or make purchases without considering the missed options. Occasionally ordering takeaway for lunch can be a smart move, especially if it gets you away from the workplace for a much-needed break.

However, if you purchase one cheeseburger per day for the next 25 years, you might lose out on several opportunities. Spending that $4.50 on a burger over that period of time, assuming a fairly realistic 5 percent RoR, might add up to a little over $52,000, excluding the lost possibility for better health.

Although this is just a simple example, the main point applies to many different circumstances. It might seem excessive to consider opportunity costs each time you want to buy a candy bar or take a trip. Opportunity costs, however, are present everywhere and affect all choices, big or small.

When funds are few, choices must be made, which is what we learn in basic microeconomics. Scarcity refers to the restricted nature and availability of certain resources, whereas choice refers to people's options over distributing and using those resources. The issue of choice and scarcity sits at the core of economics, which is the study of how people and society decide how to distribute limited resources.

While certain resources are abundant, others are scarce. We frequently focus more on how we will spend our time on any particular day than the air we breathe. That's because there seems to be a lot of air to breathe, and there are only so many hours in a day. Because we do not choose to breathe, it is not particularly fascinating to an economist.

On the other hand, a whole field of economics is dedicated to comprehending and explaining our decisions regarding how to spend our free time. The labour market places great significance on the number of hours we choose to spend working and playing. People's abilities are also in short supply, in addition to their time. The effectiveness of any allocation is often a problem for economists: how can most of such limited resources be utilised?

While the focus of mainstream economics microeconomics is on the choices and preferences of individuals in society, assessing the equitable distribution of limited resources necessitates the aggregate of preferences in order to assess the usefulness of distribution to society as a whole (see welfare economics). Therefore, the study of scarcity and choice should take into account both an allocation's efficiency as well as its equity or distributive fairness. In fact, the dispute between planned economies and free-market economies centres on the topic of equity

.A resource's rarity in a given situation can be measured and assessed objectively. In the past, economists have also looked at how people make decisions about scarce resources as though they were reached through straightforward, impartial calculations. Obviously, people's decision-making is influenced by emotion as much as logic. The quickly growing discipline of behavioural economics uses psychological insights to deepen economists' understanding of decision-making at a more individualised level.

A government or community can utilise a microeconomics policy system as a tool to plan and distribute resources, services, and products across a region or country. Economic systems control the factors of production, including land, capital, labour, and natural resources. The various institutions, organisations, entities, decision-making processes, and consumption patterns form the economic structure of a community.

Types of Economic Systems:

i. Traditional Economic System

ii. Command Economic System

iii. Market Economic System

iv. Mixed System

To describe different kinds of marketplaces, economists have developed models. The most basic kind of competition is perfect competition, where many providers and consumers are precisely the same, where finding buyers and sellers is free, and where there are no impediments to new suppliers entering the market. In a market with perfect competition, nobody can influence prices.

Both parties assume the market price, and the market-clearing price is the point at which there is an equilibrium between excess supply and demand. As long as they can sell the product for more than it costs them to produce one, suppliers will continue to do so (the marginal cost of production). As long as the pleasure they gain from their consumption outweighs the cost, consumers will continue to make purchases (the marginal utility of consumption)

.Price increases will encourage more vendors to enter the market. As taught in intermediate economics, supply will increase until a market-clearing price is reached again. Suppliers who cannot cover their costs will discontinue if prices decline. Typically, economists combine the volumes suppliers are willing to produce at various prices into a formula known as the supply curve. The likelihood of suppliers producing more increases with pricing. On the other hand, the cheaper a product is, the more people tend to buy it. The demand curve is the equation that expresses the amounts that consumers are willing to purchase at each price.

The thing to learn Microeconomics course includes:

1. Supply and Demand

2. Consumer’s Theory

3. Producer Theory

4. Welfare Economics

5. Monopoly and Oligopoly

6. Topics in Intermediate Microeconomics

7. Equity and Efficiency

The study finds that the extension of the European war, rising commodity prices, supply-side disruptions, and gloomy global growth forecasts are the main threats to India's economic recovery. The survey's participants believed that the trajectory of inflation, the size of interest rate increases necessary to preserve price stability, and the effects of higher rates on household consumption and investment demand would influence the outlook for the world economy in 2024.

A recession in the long term cannot be completely ruled out, however, as negative risks to growth are increasing, and there is significant doubt surrounding the U.S. Federal Reserve's capacity to stabilise inflation levels.

According to The Hindu, due to geopolitical unpredictability and its effects on the Indian economy, the growth prediction has been revised downward from the 7.4 percent estimate in the previous survey round (April 2024).

While industrial and services sectors are expected to increase by 6.2 percent and 7.8 percent, respectively, the median growth prediction for agriculture and related activities has been set at 3 percent for 2024–2025.

"As seen by the intensifying inflationary pressures and rising market uncertainty, the Indian economy is not immune to global turbulence. The delegates noted that these factors are likely to prolong the recovery and are putting pressure on India's economic prospects,” it read.

Economics is an evergreen subject with high national and global demand because of its significance in daily life. Economics is a very interesting subject that deals with a wide range of issues. Career options in economics, as mentioned in Kopykitab are positions such as economist, financial risk analyst, accountant, investment analyst, financial consultant, and data analyst.

Employees with knowledge of microeconomics make an average salary of 23.5 lakhs, with most earnings between 23.1 lakhs and 25.0 lakhs, as said in 6figur.

The salary of a Microeconomics specialist salary depends on a number of factors like:

1. Mode of education

2. University passed out from

3. Working experience, etc