Microeconomics was first introduced in the United States in the 1890s under the title of microeconomic theory. It was then given its own name by economists George Stigler and Kenneth Arrow. The concepts behind microeconomics include the concept of the division of labor, the idea of a production function, economic institutions, markets, and economic behavior. A number of theories were developed around microeconomics as well; these theories include microeconomics’ models, production function, welfare economics, and political economy.
Microeconomics is also sometimes compared to macroeconomics because it looks into the effect of changes in a set of economic variables on the level of output of goods and services produced by the economy. This in turn gives macroeconomists an opportunity to investigate the effect of changes in variables on the level of employment and the economy’s gross domestic product.
Microeconomists are usually grouped together by their field of specialization. Examples of microeconomic theories are micro-micro theory, production function theory, and production function theory.
Micro-Micro Theory. The micro-micro theory says that economic activities are based on the assumptions of supply and demand. Because of this, the supply and demand factors do not play any major role in determining the actions of individual economic agents. Micro-micro theory is most often applied to economics but also applies in many other areas such as medicine, psychology, law, business, government, and education.
Production Function Theory. The production function theory says that there is a specific set of activities that are performed in order for the economy to generate an economic surplus. Production function theory is applied to all branches of economics as it considers all economic transactions that are not based on the distribution of income and profits.
Welfare Economics. Welfare economics is the branch that aims to determine the distribution of incomes according to a group of characteristics that people should consider good or bad. Such characteristics are things such as the satisfaction of basic human needs or the enjoyment of happiness and the pursuit of other good or bad characteristics like health, wealth, success, and the like.
Economic behavior is also known as behavioral economics. Behavior is the way a person does things for his own reasons and for the reason of personal gain.
Political economy has also been known as social science and is concerned with social problems. Political economy considers the ways that economic institutions affect the distribution of income and the decisions of citizens regarding the use of their money.
Political economy deals with political and social issues such as the rights of women and minorities, welfare, war, and peace, and the distribution of power between the central government and local governments. It is also concerned with the political and legal systems of different countries, international trade, and finance, the economic development of nations, and the effects of globalization on economic policies.
Many studies have been made regarding the relation between micro-economic theory and economic growth. This study is based on a number of theories and research done by different people over the past several decades.
Microeconomics and economic growth go hand in hand. Economic growth is affected by the distribution of income; a large portion of economic growth is due to economic growth and prosperity that result from a high economic growth of the economy.