Video:What Is Microeconomics?with Nick Morgan
Learning about microeconomics can help you to understand the difference the two types of basic economics. Here, see information about microeconomics.See Transcript
Transcript:What Is Microeconomics?I'm Nick Jaynes for About.com and this is a brief overview of microeconomics.
Information About MicroeconomicsMicroeconomics is the study of household or individual allocation of limited resources. Generally it applies to markets of goods and services. This is in contrast to Macroeconomics, which typically deals with the sum total of economic activity. It generally deals with economic growth, inflation, and unemployment.Where macroeconomics deals with more large markets, for example, the cell phone market and the supply and demand there in. Microeconomics deals more with individual economic issues for example as pay raises, and the consumption of goods and services.
Major Area of Study in MicroeconomicsOne major area of study in microeconomics is what is called Opportunity Cost. Opportunity cost is a way of measuring the cost of goods or services. Rather than simply adding together the cost of building, for example, another garage on your home, one might also add up the cost of spending that money in another way.It's important to understand though, however, that the opportunity cost is not the sum of the all the other alternatives but rather the next most viable option.The possible opportunity costs from expanding your garage is the loss of the land to be used as a vegetable garden, OR the loss of the land solar array for power generation, OR the loss of any of the land for another reason. It's important to remember though the opportunity cost is not sum all of these alternatives but rather the foregone profit from the most profitable of the options.I hope this brief introduction into microeconomics has been helpful.
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