Microeconomics is also known as micro-economics, or “nano economics,” because it is smaller in scale than other kinds of economics. Microeconomics is characterized by the presence of a few local actors who can cause a macro-economic problem when their actions threaten the stability of that macroeconomic system. The presence of micro agents makes macroeconomics more uncertain and chaotic, leading to less efficient policy decisions. This paper discusses the macro and micro aspects of micro-emergent concepts.
There are two broad schools of micro economists who attempt to understand micro issues in economics. Some of these schools are international, focusing on micro-economic problems in different countries; others tend to be national in focus, with an assumption that most economic problems are localized to the country in which they occur. National scope economies can be a micro kind of economic problem because of the policies that surround a small locality, and even the most popular policies of other nations can have unforeseen consequences on a micro level for those living within such economies.
One of the more important facts about microeconomics is that it tends to be characterized by local action, with little or no aggregate effects on the rest of the economy. For instance, consider a drug store in a major urban area that is taken over by a monopoly. What happens is that the monopoly raises prices, reduces supply, and attempts to take control of the market through aggressive marketing practices, all of which have macro effects on the rest of society. However, because of the small size of the market, the effects are highly concentrated in the immediate micro-economic problems of the monopoly's customers, and those customers determine the short and long term consequences.
Another example is college students, who may exhibit micro-economic phenomena due to the restricted access to capital that results from academic discipline requirements. When a new course requirement creates a financial hardship for a student, many micro-economic issues arise because the student lacks access to collateral or other investment capital. Because the problem is local, rather than global, there are often social and political issues stemming from the situation as well. These micro issues become much more problematic when one considers the macro effects of the micro-economic scenarios created by these issues. Ultimately, the issues are viewed on both macro and micro levels, and the result is a general decline in overall living standards across the board.
The bottom line is that most people live in a world defined by the presence of other people. In our daily lives, we come into contact with other people on a daily basis, whether it be in the work place, at school, at home, in sports, in politics, etc. When the interaction of these individuals ceases to be random, it is commonly called a social event. Such events can have macro and micro effects, and the effects of micro-economic problems tend to be particularly severe on a micro level due . . . . . . to the localized nature of those events.
The above examples are just a few microeconomic microeconomics concepts that should help us better understand the macro effects of those events on a larger scale. It is important to remember that the effects of micro-economic problems tend to be more localized because of the localized nature of those events. As such, the solutions created for those problems tend to be more local in scope and effect. Therefore, understanding this facet of economics is important to those who would like to better understand the effects of micro-events in macroeconomics.