Overview
Microeconomics focuses on the actions of agents in the economy, and how they make the decisions that determine those actions. The two primary agents that are the focus of microeconomics are:
- Firms (producers) - organizations that produce goods and services for consumption.
- Consumers - the agents that consume the goods and services produced by the firms.
Models
The following represent some of the core ideas used in micro-economic modeling:
- Choice : describes the theory that tries to explain and/or predict the choices that agents in the economy make. It is primarily used to model consumers in the economy, but aspects of the theory can also be relevant to understanding the choices of firms.
- The Firm : models the behaviour of firms in the economy, where firms are broadly conceived to be the producers of goods and services.
- Markets - are a theoretical construct, where producers and consumers meet and exchange goods and services for money.
- Economics of Information