Microeconomics is the study of how an individual or a company makes its decisions on how to allocate the available and limited resources. The main goal of the microeconomics is to analyze the market mechanism that was set up to come up with the most affordable prices for the goods and services and the allocation of the scarce and limited resources that are available in the market. They are also available so as to analyze the market failures and the things that make it to be in such a state. Here are the principles of microeconomics that have been set so as to govern the whole process of the market mechanism.
In most time one will find out that microeconomics is divided into two contrasting combinations. These are the customers who will always want to get the best products for less and then there are the producers, who are out to make sure that they capitalize on the maximum on the profits. Principles of microeconomics also create a way in which there are various market to look at. First and foremost there is the competitive market which is the normal market that we come across everyday. There is also the oligopolistic markets, which has very few competitors, who have to outshine the competitor hence they can be able to predict the outcome of the sales. There is also the monopoly market where there is no competition.
Principles of microeconomics also create way for a market where the buyer can actually take control of the pricing of the goods. Therefore the root cause of the influence of the market will depend on the variation of the supply and the demand of the particular goods and services that are available in the market. It is a fact that when the supply is high then the demand will be low and when the supply will be low it is most definite that the demand will be high.