Principles of Microeconomics

Author: Jia Huixian, Editor-in-Chief
Publisher:
Publish Date: 2005-03-01
Features: Microeconomics studies individual economic units such as consumers and firms. By examining the economic behavior of these units, it explains the operation and role of market mechanisms in modern Western economies and the ways to improve this operation. The analysis of individual economic units in microeconomics essentially addresses two issues: first, how the demand of consumers for various products and the supply of firms for products determine the quantity and price of each product; second, how households, as suppliers of production factors, and firms, as demanders of production factors, determine the quantity and price of the use of these factors. In other words, microeconomics studies the determination of the quantity and price of products and production factors, which is essentially the price formation and operation mechanisms in market economies. Therefore, microeconomics is also known as market price theory. Under the assumptions of "perfect rationality, perfect competition, and perfect information," microeconomics employs equilibrium analysis, marginal analysis, optimal methods, input-output methods, and mathematical models to explain how the market mechanism achieves optimal resource allocation. The basic content of microeconomics includes: equilibrium price theory, consumer behavior theory, producer behavior theory, cost and revenue theory, market and firm theory, factor price theory, general equilibrium and Pareto optimal, market failure and microeconomic policy theory, etc.