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of Microeconomics
Characteristics of Microeconomics
1. Microeconomics looks at the decision of
individual units.
2. Microeconomics involves product pricing in
various types of market structures such as
pure competition, monopoly, monopolistic
competition and oligopoly.
3. Microeconomics is concerned with social
welfare.
4. Microeconomics has a limited focus. It is just
a part of the economic discipline.
Characteristics of Microeconomics
5. Microeconomics helps develop a set of useful
Economic Models
Best known economic model is the
Supply and Demand as expressed in
three different forms: Verbal/ logical,
Mathematical and Graphical
Verbal
Supply is a schedule of prices and quantities
Mathematical notations
The Law of Supply can be expressed
succinctly in an equation:
Qs = 500P
The equation Qs = 500P means that if the
Price is 1
Quantity supplied would be 500
(500 x 1 = 500)
Mathematical notations
Qs = 500P
The equation Qs = 500P means that if the
Price is 3
Quantity supplied would be 1,500
(500 x 3 = 1,500)
Thus, we can see that there is a direct
relationship between the price and the quantity
supplied as explained earlier.
Table 1
Supply Schedule
Price
Quantity Supplied
500
1,000
1,500
2,000
2,500
3,000
3000
Quantity
2500
2000
1500
1000
500
0