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History of micro economics..

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History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:35 am

Microeconomics emerged as a branch of study when economists began analyzing consumer decision-making processes and their economic outcomes in the early 18th century.

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:36 am

The first in-depth explanation of consumer thought came from a Swiss mathematician named Nicholas Bernoulli, who laid the groundwork for microeconomic theory by suggesting that consumer choices are always rational.

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:38 am

However, it wasn’t until the late 19th century, when London economist Alfred Marshall proposed examining individual markets and firms as a way to understand the broader economy, that microeconomics became formally established as a field of study.

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:40 am

In the mid 20th century, other economists rose up to modify the theories proposed by Bernoulli and Marshall. Although Marshall first described the concept of utility..

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:42 am

The satisfaction a consumer receives from a purchased product or service, economists John von Neumann and Oskar Morgenstern are credited with introducing modern utility theory, based on Marshall’s work, in 1944.

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:43 am

It’s the concept of market failure, however, that really defined microeconomics in the mid 20th century. Monopoly power is one such market failure.

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:45 am

Market failure, a term coined in 1958, refers to when markets operate in ways that prevent resources from being allocated in the most efficient manner.

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Re: History of micro economics..

Post by sujin007 on Thu Dec 06, 2012 7:47 am

Today, microeconomists are primarily concerned with analyzing market failure and suggesting ways to correct or prevent it, often through public policy or government intervention.


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