Incentive Theory of Motivationīy definition, an "incentive" is a thing that motivates a person to do something or behave in a particular way. Price Theory is based on limited data of individual groups and sometimes unrealistic assumptions, and hence it may not be entirely reliable. However, the operation of separate pieces does not provide a whole picture of how the economy works. The drawback of Price Theory is that it just provides a theoretical understanding of how particular sectors of the economy function. In a completely competitive market, the price offered by the producers is same as the price requested by the consumers and hence there is perfect economic equilibrium. It is the result of demand and supply of goods and services that determines the prices in a competitive market. Price theory explains the production, consumption and pricing of goods and services in an economy. There are quite a lot of concepts in Microeconomics but here are the most important ones that one should be aware of − Price Theory Microeconomics takes a bottom-up approach to analyse the economy. Microeconomics covers different verticals such as consumer behavior, wages, labour market dynamics, demand and supply in different marketplaces. Individuals are divided into microeconomic subgroups such as buyers, dealers, and company owners.
Microeconomics is the study of how people and individual consumers make decisions in response to changes in pricing and cost of goods and services. In this article, we will compare and contrast the different features of Microeconomics and Macroeconomics and highlight the points that differentiate the two. Macroeconomics on the other hand covers a wide range of economic issues starting from national output, gross domestic product, fiscal deficit, inflation, etc. Microeconomics deals with only specific segments of an economy such as individual labour market, demand and supply at the local level, consumer behavior, etc. Economics can be divided into two broad categories: microeconomics and macroeconomics.
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