Definition: Microeconomics
Microeconomics (from Greek prefix micro- meaning "small" + "economics") is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources.
It concerned with the behavior of individual entities such as markets, firms and households.
Typically, it applies to markets where goods or services are being bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services.
Founder: Adam Smith (1723 –1790), a Scottish social philosopher and a pioneer of political economy and Scottish Enlightenment.
Book: The Wealth of Nation (1776)
Applied Microeconomics:
Industrial organization: the entry and exit of firms, innovation, and the role of trademarks.
Labor economics: wages, employment, and labor market dynamics.
Public economics: the design of government tax and expenditure policies and economic effects of these policies (e.g., social insurance programs)
Political economy: the role of political institutions in determining policy outcomes. Health economics: the organization of health care systems, including the role of the health care workforce and health insurance programs.
Urban economics: the challenges faced by cities, such as sprawl, air and water pollution, traffic congestion, and poverty, draws on the fields of urban geography and sociology.
Financial economics: structure of optimal portfolios, the rate of return to capital, econometric analysis of security returns, and corporate financial behavior
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