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Microeconomics Made Easy
Behavior, Decisions and Choices

Microeconomics is about the behavior, decisions and choices of individual actors. There are four main parts of microeconomics:
Individual Behavior
Supply and Demand
Theory of the Firm
Competition
There are two main assumptions made in classical economics:
- that we are rational actors and we always optimize our allocation decisions
- Resources are scarce and allocating them in the most efficient manner is critical
Both these assumptions are being challenged with more nuanced thinking.
Individual Behavior
In classical economics we are completely rational like Spock when it comes to our purchasing decisions and budget allocations.
Our behavior is graphically represented by a budget constraint line and our preference curve. We optimize our buying power relative to our preferences where the two meet…