Microeconomics is one of the two main branches of modern mainstream economic theory (the other is macroeconomics). Microeconomics is concerned with how individual economic agents behave, most notably when consumers and firms1 interact in a market.2 Microeconomics typically only looks at a narrow segment of the whole economy at any one time, a practice called partial equilibrium analysis. For some (for example, Rutherford, 1992, 297-8) this is what distinguishes it from macroeconomics. For others, it is simply that microeconomics is concerned with individual behaviour (Varian, 1987, 461; Bannock, 1984, et al, 296). The latter view probably arises because Keynesian macroeconomic models were not based on aggregations of individuals, so models of individual behaviour were not macroeconomic models. I prefer the former view, as the latter would somewhat oddly include, as part of microeconomics, general equilibrium models that are based on the actions of individual agents. The distinction seems even less tenable now that many macroeconomic models are built on analysis of individual behaviour (Varian, 1987, 461).

Modern microeconomic theory is rooted in the marginalist school of thought, more commonly though somewhat idiosyncratically called neoclassical economics (Aspromourgos, 1987). The term microeconomics probably came into use in the late 1930s, though its first appearance in print seems to have been in 1941 (Varian, 1987, 461-2).

1 A firm in economics is something like a combination of Angentipso’s first definition of entrepreneur and Webster’s first definition of a producer.
2 Webster’s third definition of market comes closest to what is meant here,


Tony Aspromourgos, 1987, Neoclassical, The New Palgrave: A Dictionary of Economics, Ed by John Eatwell et al, Vol. 3, MacMillan ISBN 0-935859-10-1 (set), 625.

Graham Bannock, RE Baxter and Ray Rees, 1984, The Penguin Dictionary of Economics, 3rd Edition, Penguin, ISBN 0-14-051135-2

Donald Rutherford, 1992, Routledge Dictionary of Economics, Routledge, ISBN 0-415-12291-0

Hal Varian, 1987, Microeconomics, The New Palgrave: A Dictionary of Economics, Ed by John Eatwell et al, Vol. 3, MacMillan ISBN 0-935859-10-1 (set), 461-3.

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