Microeconomics: Meaning, Definition, Nature and Scope

1. MICROECONOMICS:
Meaning and Definitions
Dr. Dhiresh Kulshrestha
Associate Professor (Economics)

2. What is Economics ?
There are two terms:
• 1. Scarce of resources
• 2. Wants are unlimited
“Economics deals with the allocation of scarce resources among
alternative uses to satisfy human wants”

3. 2
The essence of this definition rests on the
meaning of human wants and resources, and
on the scarcity of economic resources in
relation to insatiable human wants

4. Definitions of Economics
• Economics is a science that studies human behaviour as a relationship
between ends and scarce means which have alternative uses
• According to L Robbins, K.E. Case and R.C. Fair : “Economics is a
study of how people use their limited resources to try to fulfil unlimited
wants and involves alternatives or choices.

5. 2
David N. Hayman defined Economics as a study
of Scarce resources are allocated among
alternative uses or consumer choices.

6. Meaning of Microeconomics
Microeconomics (from Greek prefix mikro-
meaning "small") is a branch of economics that studies the
behavior of individuals and firms in making decisions
regarding the allocation of scarce resources. and
“The interactions among these individuals and firms”

7. Microeconomics
• Microeconomics theory is perhaps the most important course in all
economics and business programs.
• Microeconomics theory can help us answer such questions as why there is
a trade-off between spending on health care and spending on goods and
services

8. What is Microeconomics ?
Microeconomics is the part of economics concerned with
single factors and the effects of individual decisions.

9. Meaning of Microeconomics
Microeconomics is the study of individuals, households and firm’s
behavior in decision making and allocation of resources.
It generally applies to markets of goods and services and deals with
individual and economic issues.

10. Nature of Microeconomics
 Study of the economic behavior of individual units of an economy (such as a person, household,
firm, or industry)
 Microeconomics is primarily concerned with the factors that affect:
 Individual economic choices,
 The effect of changes in these factors on the individual decision makers,
 How their choices are coordinated by markets, and
 How prices and demand are determined in individual markets.

11. Nature of Microeconomics
• Three goals of Microeconomics:
• What to produce?------ Goods and services
• How to produce? ------Production Process
• For whom to produce? ----Consumer Behavior

12. The main contents covered under
microeconomics include:
The main contents covered under microeconomics include:
• “Theory of Demand”,
• Theory of the firm, and
• Demand for labor and other factors of production.

13. Discussion on Syllabus
• Unit I: INTRODUCTION TO MICROECONOMICS
• Unit II: CONSUMER BEHAVIOUR
• Unit III: DEMAND AND SUPPLY ANALYSIS
• Unit IV: PRODUCTION AND COST ANALYSIS
• Unit V: EQUILIBRIUM OF FIRM AND INDUSTRY