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Methods of microeconomic analysis
- Microeconomics uses general and particular methods. General methods include: abstraction, analogy, induction, deduction, analysis, synthesis. The private ones include:
- Statistical methods: correlation (finding the degree of dependence of one value on another), regression (determining the influence of factors on the result).
- Mathematical modeling (description of economic phenomena using equations and inequalities).
- Limit analysis (the study of changes in some quantities when others change).
- Functional analysis (building functional dependencies).
- Equilibrium analysis (approach) is based on the assumption that there is an equilibrium state and the change in various indicators and parameters is associated with the desire for equilibrium.
Sections of microeconomics
- The theory of consumption studies the choice by consumers of the optimal set of goods for given prices and income.
- The theory of production studies the choice by firms of the optimal production plan for given prices for final goods and services, given prices for inputs and a given level of technology.
- Aggregation studies how individual solutions can be combined to generate market demand and supply. Closely related to aggregation is Public Choice Theory, which studies how collective choice emerges from individual preferences.
- The theory of general and partial equilibrium studies the interaction of many economic agents in the market in order to explain the process of pricing goods and services under various assumptions; when the market is economically efficient.
- Market structure - studies perfect and imperfect competition and the sources of market power.
- The theory of choice under uncertainty studies the influence of risk and uncertainty on the decisions of economic agents.
- Models with Information Asymmetry study how and why the mismatch of information sets of economic agents can lead to economic inefficiency.
- The theory of externalities (externalities) studies the impact of decisions made by some economic agents on the behavior of others and how this can lead to economic inefficiency.
- Public goods - how and why the existence of certain types of economic goods can lead to economic inefficiency.
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