Microeconomics

Micro is a word derived from a Greek root meanng “small”. Microeconomics concentrates on the behavior of individual households, firms, industries, and markets. Topics include how consumers decide what goods to buy and how firms decide goods to produce and what prices to charge. Microeconomists analyze market structure: why some markets are highly competitive, with hundreds or even thousands of firms producing a product, whereas other markets are very concentrated, with only one or a very few firms producing a given product. Microeconomists analyze the causes and effects of these different market structures.

Microeconomic analysis also examines the market for inputs to the production proccess. These inputs include capital such as machinery and, very importantly, labor. The study of labor markets covers issues of wages, hours of work, and working conditions and extends to such related issues as discrimination in the labor markets and the role of labor unions. Microeconomics also studies the principles of market failure and the ways government can deal with such failures. Finally, microeconomists do positive economic analysis of governments--- how and why governments be have as they do.