What effect does microeconomics have on an individual?

1 Answer

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The academic discipline of microeconomics does not have much of an impact on most people’s daily lives.  However, microeconomic forces have a tremendous impact on everyone’s daily life.

We can start with the fact that most people’s wages are set by microeconomic forces.  Wages are typically set by the supply and demand for people who do a particular job in a particular place.  If you do a job where there is a great deal of demand, you are likely to make more money than if you do a job that is not in particularly high demand.

The other broad category of impact is the impact on prices.  The price of almost everything that we buy every day is set by microeconomic factors.  It is largely supply and demand that determines the price of everything from the rent or mortgage payments that we make to the price of the ingredients that we buy to make our food.

In other words, microeconomic forces determine how much money we will make and they determine how much it will cost to buy the things we need.  This means that such forces have a tremendous effect on us.