Microeconomics: Difference between revisions
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==The basic models of microeconomics== | ==The basic models of microeconomics== | ||
===Production Possibilities Curves=== | |||
===Demand Functions and Demand Curves=== | |||
===Supply Functions and Supply Curves=== | |||
===Equilibrium Prices=== | |||
===Labor Markets=== | |||
===Elasticity of Demand=== | |||
===Consumer and Producer Surplus=== | |||
===Taxes and Welfare=== | |||
===Trade and Welfare=== | |||
===Externalities=== | |||
===Production Functions & Isoquants=== | |||
===Cost Minimization=== | |||
===Marginal Products and Minimizing Cost=== | |||
===Production and Cost in the Short-Run=== | |||
===Total, Average, and Marginal Cost=== | |||
===Profit Maximization for the Competitive Firm=== | |||
===Competitive Markets in the Short-Run=== | |||
===Competitive Markets in the Long-Run=== | |||
===Monopoly=== | |||
===Natural Monopoly=== | |||
===Price discrimination=== | |||
===Utility Functions and Indifference Curves=== | |||
===Utility Maximization=== | |||
===Demand Curves, and Income and Substitution Effects=== | |||
===Marginal Utility and Optimization=== | |||
===Discounted Present Value=== | |||
===Internal Rate of Return=== | |||
===Comparative Advantage=== | |||
===Labor Demand for the Competitive Firm=== | |||
===Competitive Labor Markets=== | |||
==See also== | ==See also== | ||
Revision as of 12:23, 1 April 2007
- <This article is under construction>
Microeconomics is the branch of Economics that studies the behavior of units called "economic agents". Microeconomic models investigate assumptions about "economic agents" activities and about interactions between these agents. An "economic agent" is the basic unit operating in the model. Most often, we do have in mind that the "economic agent" is an individual, a person with one head, one heart, two eyes, and two ears. However, in some economic models, an economic agent is taken to be a nation, a family, or a parliament. At other times, the "individual" is broken down into a collection of economic agents, each operating in distinct circumstances and each regarded as an economic agent. When we construct a model with a particular economic scenario in mind, we might have some "degree of freedom" regarding whom we take to be the "economic agents". [1]
Those economic models are instruments or "tools" which help economists better understand the economic reality. As reality is too complex, and has infinite variables - that cannot be analysed simultaneoulsy - those models make simplifying assumptions about real life. We could compare economic models to geographical maps: the models create a "map" of the economic reality the same way a map creates a conventional representation of a country. As with maps, no information will come out of an economic model unless it had been previously incorporated in the model by the researcher; this information will only be presented in a more comprehensive manner. It is important to fully understand all the "assumptions" which lie behind any economic model in order to rationally understand their results.