Why Study Microeconomics?
Microeconomics is the study of the behavior of individual households, firms and industries as well as the supply and demand relationships between producers and consumers. You might think of a household as a consumer, but households are also producers. For example, take a look at your kitchen: you take raw materials (meat, cheese, vegetables, eggs, salt and pepper) as well as capital (stove and frying pan) and your own labor to produce an omelet, which is demanded by you and members of your family. They may not pay you in money, but you’re compensated in other ways. Cooking an omelet for your family is a very simple example of an economic problem. So what’s the point? The point is that economics isn’t “all about money.” It’s about life. It’s about human behavior. In fact, economic analysis can be applied to almost any problem imaginable. For example, there is a branch of economics that studies the production of health and the demand for health. Notice that I wrote “health” and not “heal
