Scribd
Upload
96 views

Microeconomics: Engineering Economics

Microeconomics is a branch of economics that studies how individuals and small organizations make decisions about allocating limited resources. It examines how supply and demand determine prices and how prices then determine the quantities of goods and services supplied and demanded. One goal is to analyze market mechanisms that establish relative prices and allocate resources among alternative uses. Microeconomics also analyzes market failures and the conditions needed for perfect competition. Significant areas of study include general equilibrium, markets with asymmetric information, choice under uncertainty, and economic applications of game theory.

Uploaded by

Hajarath Prasad Abburu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
96 views

Microeconomics: Engineering Economics

Microeconomics is a branch of economics that studies how individuals and small organizations make decisions about allocating limited resources. It examines how supply and demand determine prices and how prices then determine the quantities of goods and services supplied and demanded. One goal is to analyze market mechanisms that establish relative prices and allocate resources among alternative uses. Microeconomics also analyzes market failures and the conditions needed for perfect competition. Significant areas of study include general equilibrium, markets with asymmetric information, choice under uncertainty, and economic applications of game theory.

Uploaded by

Hajarath Prasad Abburu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Microeconomics is a branch of economics that studies the behavior of individuals and small impacting organizations in

making decisions on the allocation of limited resources Typically, it applies to markets where goods or services are 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.
One of the goals of microeconomics is to analyze market mechanisms that establish relative prices amongst goods and services
and allocation of limited resources amongst many alternative uses. Microeconomics also analyzes market failure, where markets fail
to produce efficient results, and describes the theoretical conditions needed for perfect competition. Significant fields of study in
microeconomics include general equilibrium, markets under asymmetric information, choice under uncertainty and economic
applications of game theory. Also considered is the elasticity of products within the market system.
Microeconomic theory typically begins with the study of a single rational and utility maximizing individual. To
economists, rationality means an individual possesses stablepreferences that are both complete and transitive. The technical
assumption that preference relations are continuous is needed to ensure the existence of a utility function. Although microeconomic
theory can continue without this assumption, it would make comparative statics impossible since there is no guarantee that the
resulting utility function would be differentiable.
Microeconomic theory progresses by defining a competitive budget set which is a subset of the consumption set. It as at this point
that economists make the technical assumption that preferences are locally non-satiated. Without the assumption of LNS (local nonsatiation) there is no guarantee that a rational individual would maximize utility. With the necessary tools and assumptions in place
the utility maximization problem (UMP) is developed.

Engineering economics deals with the methods that enable one to take economic decisions towards minimizing costs
and/or maximizing benefits to business organizations.

You might also like