Features of microeconomics

Microeconomics(from Greek micros - small + economy) - part of the national economy, which differs from other sectors of production in its small size. The characteristic features of microeconomics are indicated in table. 1.

Table 1

Characteristics of microeconomics

Here is a brief explanation of the table. 1.

• In microeconomics, the following types of property are used: a) private ownership of property; b) common shared ownership (with the definition of the share of each property owner) and c) common joint property (without defining such shares).
• Typically, in microeconomics, products are produced on the basis of narrow specialization (one type of product is manufactured or some type of service is performed, for example, in a hairdresser).
• Entrepreneurial activity in microfarms is associated with the production of goods, as well as their sale and purchase on the market.
• Microfarm management is the responsibility of the owners of private or common property.

Microeconomics could not arise and develop widely in a social system that is based on non-economic coercion of people to work. This type of economy has its historical roots. In Europe it was formed in the 15th-16th centuries. Then capitalism replaced feudalism with its serfdom. The latter established civil liberties and a new economic basis for society: private ownership of the means of production and free enterprise.

Microeconomics in Russia has developed completely differently and very contradictorily. In this regard, it is important to clarify the following problem of a theoretical and practical nature.

V Problem 2.1. When and how was microeconomics formed in our country?

Table 1 clearly demonstrates the radical transformation of property relations in Russia. 2.

table 2

% to the end

However, the process of formation of microeconomics in Russia is not completely completed. This is evidenced by the following comparative data. In Western countries, small and medium-sized enterprises make up 70% of all enterprises, while in our country it is 20%. It is noteworthy, for example, that there were 4 million small businesses with fewer than 20 employees in Italy, and 6 million in the USA.

In 2010, in our country there were 17 thousand medium-sized and 228 thousand small companies (associations of individuals and legal entities), more than 1 million micro-enterprises, 4 million individual entrepreneurs and farmers. According to Russian legislation, the maximum levels for small enterprises are established in various industries: from 30 to 100 people.

To accelerate the development of small and medium-sized businesses, the Russian government has outlined and is implementing a number of urgent measures.

Firstly, the government introduced a ban on unjustified interference by officials at all levels in business activities. Such interference and frequent inspections of enterprises were often carried out by municipal employees for selfish purposes.

Secondly, the privatization of state property continued. We are talking about intensifying the purchase of real estate leased by entrepreneurs. It has been noticed that municipal authorities, instead of opening the way for entrepreneurs, rent out their property in order to generate income. The Government is extending the period of the preferential procedure for the privatization of real estate (with the exception of part of the taxation). Almost a million small and medium-sized entrepreneurs were given the right to purchase leased premises on preferential terms until July 1, 2013.

Thirdly, small businesses are now becoming more widely involved in programs for the renovation of apartment buildings and the resettlement of emergency housing.

At the beginning of 2010, the government allocated 13 billion rubles. to assist in the development of small and medium-sized businesses.

We examined in detail two parts of the system of economic relations:
a) socio-economic relations based on property and
b) organizational and economic relations.

Now, in the future, the main forms of economic activity will be analyzed (disassembled):
microeconomics,
macroeconomics and world economy.

All these forms of management have their own characteristics of the types of economic relations we have considered: a) property, b) cooperation and division of labor, c) forms of economic organization and d) economic management. In this regard, it is important to understand the distinctive features of microeconomics, macroeconomics and the world economy, as well as the characteristics of economic relations characteristic of them. These forms of economic activity differ primarily in their scale. Microeconomics– this is management in small forms (within households and small enterprises), macroeconomics- creative activity within the borders of the country, and the world economy embraces economic relationships on a global scale.

Microeconomics includes two forms of activity - households and comparatively small businesses.

What is considered a household World statistics (a science that studies quantitative indicators of the development of society) believes that a household is a collection of persons who live in one residential building or part of it. They may or may not be related, and they jointly provide themselves with food and everything necessary for life. That is, household members fully or partially pool and spend their funds. A household can also consist of one person living independently. Household is a common household run by a group of people living together.
Rice. 4.1. Structure of actual final consumption of households in Russia in 2003

As can be seen from the diagram shown in Fig. 4.1, the actual consumption of Russian households ultimately consisted of the following parts:
purchases of goods and payment for services (77.6%),
social payments from state and municipal budgets and charitable funds (15.8%),
receipts of goods and services in kind (6.6%).

A household is not just a consumer association of people. It also engages in economic activities that generate varied income.

These activities include:
1) receiving income from the sale of factors of production (for example, labor) and from property (rent for housing and land, interest on money deposited in a bank, income from shares, etc.);
2) housekeeping (work in subsidiary agriculture, purchasing consumer goods and services, home cooking and other products, consumption of material and spiritual goods);
3) education of the younger generation;
4) “external” economic relations (paying taxes to the state, receiving social benefits from the state, economic relations with foreign countries, including receiving money transfers, parcels, etc.).

What are the features of small enterprises (modern)

In the 19th–20th centuries. The number of relatively small enterprises that were in common shared ownership (partnerships, cooperatives, joint-stock companies) increased significantly. This strengthened the economic position of small entrepreneurs.

The most important reasons for the sustainability of microeconomic farms are:
their flexibility – quick adaptation to changes in consumer demands;
the need to service small volumes of market transactions. Examples include the sale of clothing and shoes, taking into account the non-standard needs of customers; repair work (carried out by watch, shoe, and car repair companies); provision of personal services (family doctor, lawyer, hairdresser); stores of extremely expensive goods for people with very high incomes (luxury yachts, high-quality sports cars, etc.);
highly specialized production of components for large assembly plants; sales of products of large companies (TVs, refrigerators, washing machines);
the use of modern microprocessor technology, which provides a great economic effect in small enterprises.

In highly developed countries, small businesses play a very important role in the economy: they create approximately 1/2 of the country's total national product. The state provides financial assistance to small businesses and reduces taxes.

Subject

Interaction of supply and demand. Market equilibrium. State regulation of prices: price flow and shortages; lower price level and surplus.

Equilibrium price or equilibrium price- this is the price at which the quantity supplied corresponds to the quantity demanded. It matches equilibrium quantity products on the market. The equilibrium price and equilibrium quantity are at the intersection of the supply and demand curves.

There are three types of equilibrium depending on the market period during which producers can make certain changes in factors of production: instantaneous equilibrium (Fig. 3.5a), short-term equilibrium (Fig. 3.5b), long-term equilibrium (Fig. 3.5c) .

Short-run equilibrium is established in a short market period. During the short term, manufacturers cannot change their production capacity, technical base, or amount of equipment.

Long-term equilibrium occurs in the long term. It can be long enough for existing firms to be able to adapt all resources to change production.

Consumer preferences. Cardinalist and ordinalist theories of utility.

Founders marginal utility theory are W. Jevons (1835-1882), L. Walras (1834-1910) and representatives of the Austrian school of economic theory of the last third of the 19th century. - beginning of the 20th century: K. Menger (1840-1921), F. Wieser (1851-1926), E. Böhm-Bawerk. They believed that the value of a product cannot be determined by the costs of living labor or all factors of production. It is determined by the utility of the product, which is assessed by the consumer, namely marginal utility.

At the core marginalism as directions of economic theory lie the following main principles:

1. Rational human behavior in a market economy.

2. Rarity or limited availability resources or goods.

Functional connections.

The law of decreasing demand in the theory of market economics is associated, first of all, with the law of diminishing marginal utility. The basic concepts of marginal utility theory are "utility", "total utility" and "marginal utility".

Utility is the ability of a product or service to satisfy human needs.

Overall usefulness- this is the consumer’s assessment of the total utility of the purchased quantity of a good or service. Since overall utility is a subjective concept, when evaluating identical units (portions) of the same product, it will differ from person to person depending on their tastes and preferences.

Marginal utility can be defined as follows:

,

where MU (marginalutility) is marginal utility;

DTU (totalutility) - change in total utility;

DQ - change in the quantity of consumed products

Cardinalists (cardinal - main, main) believed that marginal utility can be measured using, for example, the conventional unit "util". In their opinion, if n consumer goods are sold in the economy in quantities x 1, x 2, x 3, ..., x n, then their total utility for the consumer can be represented in the form of a cardinal utility function:

TU = TU(x 1, x 2, x 3, ..., x n).

The marginal utilities of additional units of a good can be represented as partial derivatives of total utility:

Unlike cardinalists, ordinalists believe that since marginal utility is a purely subjective category, it cannot be measured quantitatively. They introduce “ordinal” utility, with the help of which it is impossible to measure the degree of satisfaction of consumer needs, but it is possible to determine whether it has increased or decreased.

Maximizing profit by a company in the short term: the principle of comparing gross income with gross costs. The principle of comparing marginal revenue with marginal costs (maximizing profits, minimizing losses, liquidating a company.)

Determination time competitive the company of the optimal the most profitable production volume, providing it with maximum gross profit or minimum gross loss in the short term, Two principles (approaches) can be used:

1) comparison of gross revenue (gross income) with gross costs;

If gross revenue exceeds gross costs and the firm earns gross profit, then the product should be produced.

A company should produce in the short term in two cases:

1) if it receives gross economic profit;

2) if it incurs a gross loss, but in a smaller amount than the value of its fixed costs, i.e. Due to the gross revenue received from the sale of products, it will cover all variable costs and part of the fixed ones.

2) comparison of marginal revenue (marginal income) with marginal costs.

The company must produce the optimal quantity of products at which it will receive the maximum gross profit or, in the absence of one, will incur a minimum gross loss.

To the company It is advisable to carry out production in the short term if gross revenue (gross income) at certain volumes of output exceeds total variable costs (TC>VC).

The Gross Profit Maximization Case For a company to receive gross economic profit, it is necessary that the gross revenue curve at certain production volumes exceeds the gross cost curve

Case of minimizing gross loss In order for a firm to not receive a gross economic profit at any level of production, but to incur losses, but it should not stop production, it is necessary that the gross revenue curve for all output volumes be below the gross cost curve, but for certain production volumes exceed the curve variable costs.

Case of closure For a company to decide to stop production, it is necessary that the gross revenue schedule at all levels of output be located not only below the gross schedule, but also below the variable cost schedule

Land market and rent.

Earth– these are resources that are given by nature itself (natural resources) and can be used to produce goods and services.

Land as a factor of production has the following features :

1) unlike other factors of production, land is not reproducible at will, i.e. its quantity is limited;

2) in its origin it is a natural factor, and not a product of human labor;

3) land cannot be moved, freely transferred from one industry to another, from one enterprise to another, i.e. she is motionless;

4) land used in agriculture, when used rationally, not only does not wear out, but also increases its productivity.

The conclusion follows from this: whoever owns or uses land receives certain advantages. In this regard, it is important to distinguish between two concepts: “land ownership” and “land use”.

Land tenure means the right of a given (individual or legal) person to a certain plot of land on historical grounds. Most often, land ownership refers to the right to own land. It is carried out by land owners.

Land use is the use of land in the prescribed manner. The user is not necessarily the owner. Most often, in real life, subjects of land ownership and land use are personified by different persons. In this regard, special economic relations arise between them, generating special income and its special economic form - land rent.

There are two concepts of rent. In a broad sense rent - This is income from capital, property, land, and other natural resources that does not require its recipients to engage in entrepreneurial activity. In this case, rent is the income that the owner receives from providing any property resources for use by other individuals and legal entities.

However, economic science also uses a narrower concept - economic rent. Economic rent - is the price paid for use land and other natural resources. In other words, economic rent is mainly land rent.

The price of any resource depends on supply and demand. Accordingly, the amount of land rent is determined by the demand for land and its supply on the market.

Since the quantity of land is limited, and in its original form it is a free and irreproducible gift of nature, the supply of land will be completely inelastic, i.e. The supply graph is a vertical line.

Demand on land is derived from the demand for products manufactured on this land. It therefore depends primarily on the demand for the product, as well as the quality, fertility and location of the land (especially when used for non-agricultural purposes). The land demand graph is decreasing due to the law of diminishing demand for goods produced on this land and the law of diminishing returns.

Due to the constancy of the supply of land, land rent as its price is completely determined by the demand for land (Fig. 11.1). The lower it is, the lower the value of land rent, other things being equal.

The peculiarity of land rent compared to other resource prices is that it does not perform a stimulating function, those. does not lead to an increase in land supply. For example, high wages for a certain type of labor will help expand the supply of workers for this type of labor. A high level of land rent, especially in modern conditions when land has been developed, will not lead to an increase in the supply of land, since its quantity in nature is limited.

The rent obtained as a result of the use of more fertile, productive and conveniently located land is called differential rent. There are differential rent I, associated with the natural fertility and location of the land, and differential rent P, obtained as a result of the artificial fertility of the land, the efficiency of investments made in the land (reclamation, fertilization, use of technology, etc.).

Characteristics of microeconomics as a science. Methodology of microeconomics.

Microeconomics studies economic categories, principles, laws, models, problems of effective use of limited resources by subjects of microeconomics in order to achieve the greatest economic benefit and maximum satisfaction of their economic interests. It explores economic behavior, the economic choice of microeconomic subjects in the process of production, distribution, exchange and consumption of material goods and services in conditions of limited resources.

Subject macroeconomics is the state, which is understood as the totality of all government agencies, government bodies designed to regulate the relationships of microeconomic entities, exercise, if necessary, control over their activities, and strive for the maximum realization of public national interests.

The objects of microeconomics research are economic indicators that characterize the activities of the relevant entities.

Microeconomics performs the following functions:

1) studies the economic categories that determine the activities of various economic units (utility, demand, supply, profit, etc.);

2) explores the economic behavior of microeconomic subjects in various market conditions;

3) clarifies economic principles and laws that allow business entities to make the most effective and rational decisions and make optimal choices;

4) studies the interaction of various economic units as part of larger market structures, for example, the industry as a whole (sellers of a certain type of product, buyers of a specific type of resource, etc.);

5) serves as a methodological basis for forecasting production development and studying market conditions;

6) examines the impact of the state on firms and households (for example, regulation of monopolies).

Microeconomics uses methods of analysis characteristic of economic theory as a whole: induction and deduction, abstraction, modeling, etc.

Induction refers to the derivation of general and particular principles, laws, models and theories from facts.

Deduction refers to the transition from the general to the specific, from principles, laws, models, theories to facts.

Abstraction is a mental distraction, separation from certain minor aspects, properties or connections of objects, processes and phenomena in order to highlight their main, essential connections and features.

One of the methods of microeconomics is modeling, which allows you to study economic processes based on the construction of their models. An economic model, as noted above, is a simplified diagram or conventional description, a conventional image of economic reality.

When studying microeconomic processes, verbal, mathematical, tabular and graphical models are used.

Money as a category of commodity production. It studies the activities of a specific company: what is the volume of production, what is the price of the product, the number of workers, income and expenses, etc. Therefore, microeconomics includes the economic activities of both individuals, families or individuals, and legal entities of companies. The behavior of an economic entity is the process of making and implementing decisions about how to act in a market environment, i.e.

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Subject of study of microeconomic theory and its role in the national economy

Definition 1

Microeconomics is a science that studies the functioning of economic entities in the course of their activities of production, distribution, consumption and exchange.

Microeconomic science allows us to explain how and for what reason certain economic decisions of the lower level are made; how consumers make decisions about purchasing a product or service; what impact does a change in prices and income have on their choice? how enterprises plan their workforce; how workers make decisions about where and how long they work.

The subject of microeconomics is economic relations that are associated with the efficient use of resources in conditions of their limitation, the implementation of decision-making by economic agents subject to economic choice. For any society, with limited resources, choice and its rational use for the processes of production and consumption are assumed.

Microeconomics studies the following main areas:

• Consumer problems - why agents choose precisely such sets of goods;
• Problems of producers - how and why agents of production choose certain sets of production factors and the structure of the range of products;
• Market equilibrium and market structure;
• General equilibrium state - how and why prices for certain goods or services are formed, how exchange is carried out under different offers, under what conditions the market environment is economically efficient;
• Information asymmetry - how and why divergent information sets of economic agents can lead to ineffective economic actions;
• External effects - how and why there is the possibility of indirect influence by one’s choice on the decisions of other market participants;
• Public goods – how and why the presence of certain types of economic goods leads to economic inefficiency;
• Social choice theory, which is a branch of economics that aims to study the various ways and means by which society uses government agencies for its own needs.

Stages of development of microeconomics

Microeconomics has gone through four main stages in its development:

Before 1871, there were no scientific works proposing a new system of economic thought instead of the classical one. However, works appeared that proposed some approaches that were subsequently included in the tools of microeconomic theory. In 1826, I. Thunen used differential calculation for the first time and proposed his own method of differential rent in the economics of space. The French researcher O. Cournot at the end of the 1830s described an option for analyzing enterprises on the market. In 1854, Hermann Gossen studied the psychological factors of economic behavior of economic entities and explained the laws of saturation of human needs.

The second stage lasts from 1871 to 1880. In 1871-1874, a “marginalist revolution” took place, which served as the impetus for the formation of a new discipline called “economic theory.”

The third stage lasts from 1890 to 1920. In 1890, the English economist A. Marshall published his own monograph, which later became the basic textbook in the field of microeconomics in the first half of the 20th century. His proposals consisted of a compromise version of determining market value using marginal utility and production costs; he formulated the law of supply and demand. Marshall's research was continued by A. Pigou, who analyzed situations of options and markets of a monopoly nature under government control, and the resulting market imperfections through taxes. At this stage, representatives of the mathematical school, using mathematics as a tool for economic research, formulated a quantitative approach to determine marginal utility, and also explained the equilibrium theory of the economy.

At the fourth stage, from 1930 to 1960, microeconomics is replenished with new discoveries. The situations of monopolistic oligopoly and competition described in publications of the 1930s are actively studied.

Note 1

Microeconomic theory studies the goals and means of individual economic entities, the conditions for the compatibility of their plans for economic activity, the mechanisms and directions of interaction between individual farms.

Features of microeconomics

The relationships between people in the economic system are complicated by the fact that in addition to relationships in production, they have relationships in the market for a given product and other market sectors, relationships with government agencies, and foreign economic relations. All these relationships relate to the object of study of the theory of economics. Microeconomics, which is part of this theory, has a similar object of study: economic life, economic activities of people and their relationships.

However, microeconomics also has distinctive features that give it the status of a special branch of economic theory.

The first feature is the focus of microeconomics on studying not the whole, but individual units of the economic system, in other words, participants in economic activity who independently make decisions and implement them in their economic life.

The second feature is that microeconomics is based on the initial assumption about the rationality of the actions taken by economic entities.

The third feature of microeconomics is the methods of analysis it uses. Of particular importance is the principle of the limit approach.