Resources are always limited but needs unlimited. Economics is the study of how man tries to reconcile this disparity. When the resources to meet the unlimited needs are scarce, man has no choice but to make some rational choices on what to purchase and what to forgo. Such decisions are usually difficult because they are tradeoffs. The value of these tradeoffs is what referred to as opportunity cost is. When you try to solve economic issues by finding the most appropriate tradeoffs, you are said to be trying to minimize the opportunity cost.
Sometimes, the sacrifices that are made are linear. This notwithstanding, economists try to look at the equation in terms of the appreciating amounts in terms of cost using curvilinear relationships.
Opportunity costs can be constant or they can be increasing depending on several factors. Whichever case, their illustration is best when we attempt to look at all other choice combinations. Economics introduces us to all manner of models, most of which concentrate on the consumer while others focus solely on the producer. When studying economics, models are graphs should be looked at as tools that are used to simplify reality.
When studying the ability of a nation to produce two goods, say X and Y, there are numerous X and Y combinations that are possible but the production of more Y might lead to the production of less X while the production of more X may also lead to the production of less Y.
Microeconomics looks at the application of the concept of opportunity cost on margins. In simple terms, it looks at how variables affect each other – e.g. a change in variable X will result in a change in variable Y. Marginal analysis is an important topic in economics because it deals with this and the possibilities frontier model explains it. This model looks at the ability of a company to produce certain items. It looks at how various factors come into play including choices of households, scarcity as well as tradeoffs. However, this is more of a macroeconomics model. Microeconomics, unlike macroeconomics, largely focuses on how the consumers and produces interact. Macroeconomics on the other hand looks at the entire economy of the nation or region as a whole.
Economics students have to deal with a number of pertinent questions of production like what is produced? How much will be produced and for whom will it be produced? There are a number of assumptions that must be made in the study of microeconomics. These include:
Problems that are not related to scarcity usually come up in the market when any of the above assumptions are not met. When this happens to a market, the market can be said to be a failed market. Failed markets often inspire the government to intervene through various interventions including the formations of public policies.
The following are some microeconomics research topics ideas that you can focus on when writing your research paper on microeconomics:
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