Principals of Microeconomics

In the modern economic system presented in the world today, microeconomics, and the study of such, is a vital part of the budding economic scholar. In most circumstances, microeconomics is based on the cumulative study of how individuals and firms, or a combination of the two, make decisions regarding the allocation of resources, typically in markets where goods and services are bought and sold. This allocation, or optimization of limited funds through distribution, usually follows 2 standardized theories: the Consumer and Producer. Consumers usually choose to maximize their available preference in the market, with a limited income value or time aspect. This is evident in the world economy, with consumers always being fiscally motivated and generally basing decisions off of price and how long it may take to fulfill this decision. Producers follow a different spectrum. Generally, producers base their actions and decisions off of maximizing profit, with little capital usage or loss. These two relationships bud off of each other, as producers’ profit is generated by the consumer’s interest in certain goods created by the producer.

With both aspects in hand, the consumer and producer fall into many forms of markets. There are two main categories of markets: Product Markets, and Factor Markets. Product Markets are the more commonly seen markets, in which individuals purchase products from firms or businesses. This is where the Consumer and Producer theory comes into play. Factor Markets are generally the opposite, having firms buy services from individuals. These services may not follow the definition of “buy,” but rather guide along the relationship between employer and employee. A Factor Market is where firms or businesses seek out ...

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...d off pertinence to society, and the way things should be based off of necessity and assistance to the modern society, as well as the economic world. Using sports is a great way to describe both. With Lebron James, Positive and Normative analysis come into play. The Positive Analysis view would state that Lebron James makes 100 million dollars a year because that is his market value, based off of the amount of fans/viewers he has. The Normative Analysis view would state that his income is too high, because he doesn’t play a vital role in the modern society, whereas a scientist, per se, would have a higher necessity for that pay grade because they provide real fact and scientific explanation for certain topics, giving a helpful assistance to society. The scientist would play a greater role in the Normative Society, whereas Lebron would overtake the Positive society.