Definition of 'Microeconomics' - The Economic Times

Definition: Microeconomics is the study of individuals, households and firms' behavior in decision making and allocation of resources. Nifty17,625.70271.65TubeInvestments1,888.60133.8MiraeAssetHybridEquityFundDirect-Growth17.14% InvestNowMiraeAssetEquitySavingsFundDirect-Growth14.63% InvestNowMarketWatchSearch+HomeETPrimeMarketsNewsIndustryRISEPoliticsWealthMFTechJobsOpinionNRIPanacheETNOWMoreBusinessNews›Definitions› Economy,Budget ›MicroeconomicsCategoriesGlossaryEconomyEquityInsuranceBudgetMarketingMutualFundSpaceTechnologyTestingHumanResourceFinanceSecurityRealEstateCommoditySportsSoftwareDevelopmentAnalyticsEntertainmentHRTransportationAstronomyShippingMathematicsRetailEducationSuggestanewDefinitionProposeddefinitionswillbeconsideredforinclusionintheEconomictimes.comEconomy-BudgetPREVDEFINITIONMacroeconomicsMacroeconomicsisthebranchofeconomicsthatstudiesthebehaviorandperformanceofaneconomyasawhole.ReadMoreNEXTDEFINITIONMonetaryPolicyMonetarypolicyisthemacroeconomicpolicylaiddownbythecentralbank.ReadMoreDefinitionof'Microeconomics'Definition:Microeconomicsisthestudyofindividuals,householdsandfirms'behaviorindecisionmakingandallocationofresources.Itgenerallyappliestomarketsofgoodsandservicesanddealswithindividualandeconomicissues. Description:Microeconomicstudydealswithwhatchoicespeoplemake,whatfactorsinfluencetheirchoicesandhowtheirdecisionsaffectthegoodsmarketsbyaffectingtheprice,thesupplyanddemand. WatchthevideotolearnmoreaboutMicroeconomics PREVDEFINITIONMacroeconomicsMacroeconomicsisthebranchofeconomicsthatstudiesthebehaviorandperformanceofaneconomyasawhole.ReadMoreNEXTDEFINITIONMonetaryPolicyMonetarypolicyisthemacroeconomicpolicylaiddownbythecentralbank.ReadMoreServiceTaxServicetaxisataxleviedbythegovernmentonserviceprovidersoncertainservicetransactions,butisactuallybornebythecustomers.ItiscategorizedunderIndirectTaxandcameintoexistenceundertheFinanceAct,1994. Description:Inthiscase,theserviceproviderpaysthetaxandrecoversitfromthecustomer.ServiceTaxwasearlierleviedonaspecifiedlistofservices,butinthSovereignRiskAnationisasovereignentity.Anyriskarisingonchancesofagovernmentfailingtomakedebtrepaymentsornothonouringaloanagreementisasovereignrisk. Description:Suchpracticescanberesortedtobyagovernmentintimesofeconomicorpoliticaluncertaintyoreventoportrayanassertivestancemisusingitsindependence.AgovernmentcanresorttosuchpracticesbyeasilyalteringDepression:Depressionisdefinedasasevereandprolongedrecession.Arecessionisasituationofdecliningeconomicactivity.Decliningeconomicactivityischaracterizedbyfallingoutputandemploymentlevels.Generally,whenaneconomycontinuestosufferrecessionfortwoormorequarters,itiscalleddepression. Description:ThelevelofproductivityinaneconomyfallssignificantlyduringadCrossElasticityOfDemand:Themeasureofresponsivenessofthedemandforagoodtowardsthechangeinthepriceofarelatedgoodiscalledcrosspriceelasticityofdemand.Itisalwaysmeasuredinpercentageterms. Description:Withtheconsumptionbehaviorbeingrelated,thechangeinthepriceofarelatedgoodleadstoachangeinthedemandofanothergood.Relatedgoodsareoftwokinds,i.e.substitutesandcStatutoryLiquidityRatioTheratioofliquidassetstonetdemandandtimeliabilities(NDTL)iscalledstatutoryliquidityratio(SLR). Description:ApartfromCashReserveRatio(CRR),bankshavetomaintainastipulatedproportionoftheirnetdemandandtimeliabilitiesintheformofliquidassetslikecash,goldandunencumberedsecurities.Treasurybills,datedsecuritiesissuedundermarketborrowingprogrammeSeasonalAdjustment:Thisisatechniqueaimedatanalyzingeconomicdatawiththepurposeofremovingfluctuationsthattakeplaceasaresultofseasonalfactors. Description:Seasonaladjustmentofeconomic/timedataplaysacrucialroleanalyzing/judgingthegeneraltrend.Intheworldoffinance,comparisonofeconomicdataisofimmenseimportanceinordertoascertainthegrowthandperformanceofacompanDomesticInstitutionalInvestors(diis):Domesticinstitutionalinvestorsarethoseinstitutionalinvestorswhichundertakeinvestmentinsecuritiesandotherfinancialassetsofthecountrytheyarebasedin. Description:Institutionalinvestmentisdefinedtobetheinvestmentdonebyinstitutionsororganizationssuchasbanks,insurancecompanies,mutualfundhouses,etcinthefinancialorrealassetsofacountry.SimplystateMarginalStandingFacilityMarginalstandingfacility(MSF)isawindowforbankstoborrowfromtheReserveBankofIndiainanemergencysituationwheninter-bankliquiditydriesupcompletely. Description:BanksborrowfromthecentralbankbypledginggovernmentsecuritiesataratehigherthanthereporateunderliquidityadjustmentfacilityorLAFinshort.TheMSFrateispegged100basispointsorapercentageTrueCostEconomics:Truecosteconomicsisaneconomicmodelthatincludesthecostofnegativeexternalitiesassociatedwithgoodsandservices. Description:Ifthepricesofgoodsandservicesdonotincludethecostofnegativeexternalitiesorthecostofharmfuleffectstheyhaveontheenvironment,peoplemightmisusethemandusetheminlargequantitieswithoutthinkingabouttheirilleffectsontheenvAssetTurnoverRatioAssetturnoverratioistheratiobetweenthevalueofacompany’ssalesorrevenuesandthevalueofitsassets.Itisanindicatoroftheefficiencywithwhichacompanyisdeployingitsassetstoproducetherevenue.Thus,assetturnoverratiocanbeadeterminantofacompany’sperformance.Thehighertheratio,thebetteristhecompany’sperformance.AssetturnoverratiocanbedifferentfroTrendingDefinitionsDebtfundsReporateMutualfundGrossdomesticproductDataminingAdvertisingProductMonopolyCryptographyDepreciation85000Sensexgains460points,Niftytops17,350;IndigoPaintssurges10%117000Sensexsettlesflat;Niftyendsat17,204;RBLplunges9%1471000PrashantJainofHDFCMutualFundonthetophotthemestobetonin2022142000Sensexdrops170points,Niftybelow17,200;IRBInfrarises5%128000BuyorSell:StockideasbyexpertsforDecember29,2021126000Stocksinfocus:RIL,GMRInfraandDrReddy'sLabs138000Sensexgains477pts,Niftyreclaims17,200;IT,telecomstocksclimb249000Sensexrises300points,Niftynears17,200;MTNLrallies10%227000BuyorSell:StockideasbyexpertsforDecember28,2021MailthisDefinition