What are the uses of microeconomics?

Answer 1

The uses of Micro Economics are listed below:

1. Individual Behaviour Analysis: Micro economics studies behaviour of individual consumer or producer in a particular situation.
2. Resource Allocation: Resources are already scare i.e less in quantity. Micro economics helps in proper allocation and utilization of resources to produce various types of goods and services.
3. Price Mechanization: Micro economics decides prices of various goods and services on the basis of 'Demand-Supply Analysis'.
4. Economic Policy: Micro economics helps in formulating various economic policies and economic plans to promote all round economic development.
5. Free Enterprise Economy: Micro economics explain operating of a free enterprise economy where individual has freedom to take his own economic decisions.
6. Public Finance: It helps the government in fixing the tax rate and the type of tax as well as the amount of tax to be charged to the buyer and the seller.
7. Foreign Trade: It helps in explaining and fixing international trade and tariff rules, causes of disequilibrium in BOP, effects of factors deciding exchange rate, etc.
8. Social Welfare: It not only analyses economic conditions but also studies the social needs under different market conditions like monopoly, oligopoly, etc.

Answer 2

As microeconomics is as a discipline one that focuses on analyzing the behavior of individual decision makers when faced with economic scarcity, the uses of modern microeconomic theory are simply put, vast.