Micro Economics:Definition and Types

Economics is classified in two branches:micro and macro economics.Micro economics is derived from the Greek word 'mikro' which means small.Thus,micro economics is the study of economic action and behave of individual units.It explains the small component of national economy and explains their inter-relationship as well as equilibrium situation. It tells us how the individuals and firms make themselves as well off as possible in the world of scarcity and consequences of those individual decisions for market and entire economy.
Micro economics solve the basic economic issues like what to produce?,how to produce?,ans for whom to produce?.

Types of Micro economics
1.Simple Micro Static
2.Comparative Micro Static
3.Micro Dynamics
                                              1.Simple Micro Static
Under this system,all the factors included in the model do not want to change their status but remains constant.And here the point of equilibrium is determined.And is always constant.It is the analysis of micro economics equilibrium at a point of time.

Above figure assumes both demand and supply is constant.An economy is always  at price P and demand and supply are DD and SS.And hence it always gains the equilibrium at point E.

2.Comparative Micro Economics

This economics fall between simple statics and micro dynamics.It makes ta comparison between the two equilibrium.It is like two steel pictures taken randomly.And the comparison made between those two pictures.Under this,all the factors in an economy may change. Equilibrium situation may change.One equilibrium breaks down and another forms.And finally the comparison between those two equilibrium points is done.But it doesn't explains why the first equilibrium is broken and new is formed.It only compares.

In an economy demand may increase from DD to D'D',which leads the change in equilibrium from E1 to E2.Here the comparison between E1 and E2 is explained.

3.Micro Dynamics
As like the comparative micro static,it compares the two equilibrium:old and new,but it also fully explains about the process of breaking of old equilibrium point and formation of new one.In another way,micro dynamics explains the lagged relationship among micro variables.

Here the equilibrium of demand and supply is changed due to the bargaining and convincing relation of buyer and seller for quantity and price of the product.
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