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

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Economics

Definition of 'Economics'

A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on individual consumers.
Economics is often referred to as "the dismal science."

General Characteristics

Economics studies human welfare in terms of the production, distribution, and consumption of goods and services. While there is a considerable body of ancient and medieval thought on economic questions, the discipline of political economy only took shape in the early modern period. Some prominent schools of the seventeenth and eighteenth centuries were Cameralism (Germany), Mercantilism (Britain), and Physiocracy (France). Classical political economy, launched by Adam Smith's Wealth of Nations (1776), dominated the discipline for more than one hundred years. American economics drew on all of these sources, but it did not forge its own identity until the end of the nineteenth century, and it did not attain its current global hegemony until after World War II. This was as much due to the sheer number of active economists as to the brilliance of Paul Samuelson, Milton Friedman, and Kenneth Arrow, among others. Prior to 1900, the American community of economists had largely been perceived, both from within and from abroad, as a relative backwater. The United States did not produce a theorist to rival the likes of Adam Smith (1723–1790), David Ricardo (1772–1823), or Karl Marx (1818–1883).

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