Micro Economics – Importance and Limitation

Micro Economics – Importance and Limitation

Micro – a word which is firstly used by Ragner Frisch. In micro economics, we include the economic activity at micro level or unit level or individual level. Micro economic cover all its financials activities at lower levels. It also analysis them & find out some meaning-full outcomes. In other words, we can say that it is a study about “special firm, special family, individual incomes, prices or special goods and services”.

Micro Economics

ü Micro economics help us to understand the micro level basic activity of an economic. It provide a base for economic because there is no authority to regulate the economy. What to produce, how to produce, for whom to produce or how to distribute, these basic questions solved by the consumer and firm at their own level.

ü Many economic policies formed by different – 2 tools which is provided by the micro economics. Government provide lots of facilities like post, train, water etc. The cost is fixed at break even points for these services.

ü  Micro is the basic economics. So it helps us to allotment or relocation of different resources. All our resources are rare and we must utilize them fully.

ü  It helps us to understand the current consumer market and also help to understand the demand and supply factor.

ü  Micro level is working on ground level so we are able to understand the taxation issue also and their effect.

ü  It also help us to understand the international trade like defecates, demands and supply of foreign currency.

ü  With micro economic, we make & use such a model which helps us for real economic phenomena.

Limitations –

ü  It assume that economic have a full employment

ü  It adopt a laissez faire policy

ü  It not provide any support for whole economic picture