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Differentiating Between Market Structures Essay

In: Business and Management

Submitted By kdouble1212
Words 770
Pages 4
Kevin Edwards
Week 2 -Microeconomics and the Laws of Supply and Demand
6/23/2014

Microeconomics looks at the behavior of individual people and companies within the economy. It is based on the idea of a market economy, in which consumer demand is the driving force behind the prices and production levels of goods and services. Microeconomics is interested in how specific parties choose to use the limited resources that are available to them. It focuses on what drives them to make their decisions, as well as the ways in which their decisions affect the supply and demand of particular goods and services. In turn, these choices influence the price levels of various commodities. Microeconomics also examines how the decisions of individuals impact specific industries. For example, economists studying at the micro level might be interested in discovering how current consumer demand is affecting the well-being of the oil industry. Another basic but principle of microeconomics is the theory of the firm. This studies the actions of businesses as they strive to increase their profits. It looks at which resources they choose to utilize as inputs, how much they produce, and what they charge for their goods or services. In summary, microeconomics concerns itself with the human beings whose purchasing and production-related decisions come together to form the backbone of a given economy. Even when it involves companies, the focus of microeconomics is always at the personal level.

The most concrete explanation of macroeconomics is that it is a study of the big picture in the economy. Instead of focusing on individual households and firms, it examines conditions within the economy as a whole. This is the most vital difference of micro and macroeconomics. In more technical terms, macroeconomics looks at the factors that influence aggregate supply and demand. Since it is

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