IMPORTANCE OF MICROECONOMICS

What are the Importance Of Micro Economics

Before Keynesian revolution, the body of economics mainly consisted of micro economics. The classical economics as well as the neo-classical economics belonged to the domain of micro economics. The importance and uses of micro economics in brief are as under:

Microeconomics important to understand the working of free market  economy. It tells us as to how the prices of the products and the factors of production are determined. It throws light as to how the goods and services produced are distributed among the various people for consumption through market mechanism.

Helps in knowing the conditions of efficiency. Micro economics helps in explaining the conditions of efficiency in consumption, production and in distribution of the rewards Of factors of production. It highlights the factors which are responsible for the departure from achieving the optimum efficiency. It suggests policies also which help in the promotion of economic efficiency of the people.

Working of the economy without central control. The micro economics reveals how a free enterprise economy functions without any central control.

It is a Study of welfare economy. Micro economics involves the study of welfare economics