Microeconomics Supply Chain
Microeconomics
Introduction : What microeconomics is all about ?
Macroeconomics focus on the economy as a whole. In macro, you outline relationships between variables ( growth, employment rate, investment…).
Micro : focus on economic agents, players, and companies. Focus on how consumers and companies are behaving. In micro you look at the economy as being structured, divided in several individual markets.
It is an important difference in focus : from the overall standpoint to the micro one here. For example, you will focus on markets separately : the Real Estate one, the Financial market, the consumer market, etc… That’s why competition is mainly a microeconomics issue. A micro question : what are the conditions for the Real Estate to be balanced ? When a market is balanced in microeconomics, we speak of a “partial equilibrium”. In micro you can (conceptually) move from partial equilibriums to global equilibrium by adding all partial equilibriums.
Rationality, scarcity and opportunity costs.
Rationality
In terms of social sciences : microeconomics is a social science which relies on methodological individualism. It derives from methodology, but in a specific way to look at social realities. It means that if you want to understand a social phenomenon( why a price moves up, a market changes…) you have to first understand individual behavior. By looking in how individuals are behaving, you can derive logical relationships that unable you to understand social phenomenon. It is an assumption. The key driving force explaining why prices are moving up or down, etc is individual behavior.
Another assumption of microeconomics is that people behave in a rational way. People will make decisions in an intentional way. Economic agents are rational. This is a major assumption.
Looking at micro in a historical context : appeared in the XIXth century, and developed really in the early XX. It first appeared as a new school of economics (
Introduction : What microeconomics is all about ?
Macroeconomics focus on the economy as a whole. In macro, you outline relationships between variables ( growth, employment rate, investment…).
Micro : focus on economic agents, players, and companies. Focus on how consumers and companies are behaving. In micro you look at the economy as being structured, divided in several individual markets.
It is an important difference in focus : from the overall standpoint to the micro one here. For example, you will focus on markets separately : the Real Estate one, the Financial market, the consumer market, etc… That’s why competition is mainly a microeconomics issue. A micro question : what are the conditions for the Real Estate to be balanced ? When a market is balanced in microeconomics, we speak of a “partial equilibrium”. In micro you can (conceptually) move from partial equilibriums to global equilibrium by adding all partial equilibriums.
Rationality, scarcity and opportunity costs.
Rationality
In terms of social sciences : microeconomics is a social science which relies on methodological individualism. It derives from methodology, but in a specific way to look at social realities. It means that if you want to understand a social phenomenon( why a price moves up, a market changes…) you have to first understand individual behavior. By looking in how individuals are behaving, you can derive logical relationships that unable you to understand social phenomenon. It is an assumption. The key driving force explaining why prices are moving up or down, etc is individual behavior.
Another assumption of microeconomics is that people behave in a rational way. People will make decisions in an intentional way. Economic agents are rational. This is a major assumption.
Looking at micro in a historical context : appeared in the XIXth century, and developed really in the early XX. It first appeared as a new school of economics (