How can we say that micro economics is a price theory?
We can say that micro economics is a price theory because it
studies about the prices of product in different market. And it also judges the
value of factors of production like land, labour, capital and organization.
In perfect competition market, the meeting
point of demand and supply will be the price of a product. Micro economics
analysis the point and figure out the price of that product. In this type of
market consumers are price makers.
In monopoly market, the producer of a product decides the price
of that commodity, micro economics analysis it, so the producer cannot take
very high price from consumer. So, we can say that micro economics is a price
theory.
In the other hand it decides the price of factors of production
and also decides the amount which should pay for land, labour, capital and
organization. Therefore it is known as price theory.
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