Managerial economics is a branch of economics which is applied in decision making. It has developed many tools, techniques, and methods to solve the business-related problems.
And thus the application of the economics to solve the business related problems can be termed as managerial economics.
Managerial economics can be further classified as microeconomics and macroeconomics. If you want to know the what is microeconomics. Then your search will end here. Because in this article of mine, I will tell you about the meaning of the microeconomics and the limitations.
What is Meaning of Microeconomics?
So without wasting much of time let us check out the meaning of the term microeconomics. It is a branch of economics which studies a particular decision-making unit. It studies the behavior of individual business, household, and economy. In other words, we can say that it studies a small portion of the economy of the country.
Limitations of Microeconomics
The microeconomic’s analysis is useful and necessary for a country to understand the economic situation. But at the same time, it has, it’s own limitations which are mentioned below.
1) Full Employment.
The use of microeconomics is limited to full employment the assumption of the full employment is far from reality.
2) Individual and Aggregates.
This is the second limitation, what is true for an individual may not be true for all. For example, savings is a private. But when an individual saves money it becomes a virtue. But if the whole population starts saving money then it will result in the reduction of the national income.
3) Area of Study is Limited.
The area covered by the microeconomics is essentially limited. There are certain areas of the economy like international monetary rate etc. which the managerial economics fails to explain.
Also Read:
- Roles and Responsibilities of Managerial Economist.
- Functions of Managerial Economist.
- And Who is Managerial Economist?
Conclusion
This was all about what is microeconomics and it’s limitations. I hope you are clear with all the information mentioned in this guide. But if you have any kind of doubts in your mind then you can comment down below.