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Concepts of Microeconomics

Basic Concepts of Microeconomics

The study of microeconomics involves several key concepts, including (but not limited to): 

  • Demand, supply and equilibrium: The theory of supply and demand help determine prices in a competitive market. In a perfectly competitive market, it concludes that the price demanded by consumers is the same supplied by producers. That results in economic equilibrium.
  • Production theory: This is the study of production — or the process of converting inputs into outputs. 
  • Costs of production: This theory states that the price of goods or services is determined by the cost of the resources going into making it. 
  • Labor economics: is the need to understand the functioning and dynamics of the wage labor market. It looks at the suppliers of labor services (or workers), the demand for this service (employers), and tries to understand the pattern of wages, employment and income

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