Definition of Microeconomics

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Prof. Ragnar Frisch of Oslo University has coined the term Micro Economics during 1920’s. He categorizes the subject matter economics in to two categories: Microeconomics and Macroeconomics. Microeconomics is the combination of two words: micro + economics, where micro is derived from Greek word ‘Mickros’, which means ‘small’.

 Literally the word Micro means a millionth part. Microeconomics deals with the individual agents, i.e. households and businesses. In this way Microeconomics deals with a very small part of the overall economy. For example, when we study the cost of a particular good instead of studying the general cost level in the economy, we actual are studying Microeconomics.

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