Microeconomic Theory


is the study of individual decisions within a marketplace. Its prefix stems from the Greek word “mikrós” meaning “small.” It would, therefore, make sense to surmise that microeconomics is an economic theory on a small scale while the opposite (macroeconomics) is the study of large-scale economics – large-scale trends and the activity of entire economies. Many see micro as a cause of macro, and therefore many universities believe it prudent to teach micro before macro. Think of microeconomics as the basics or foundation. Economics, after all, is entirely dependent on our choices as consumers.

Orchard will give you the tools to understand your power, influence, and impact as a consumer and market maker. Not only will you be able to leverage what you have, but also what you know.

Small Scale Has Implications for Your Investments

Since microeconomics focuses on individual choice, it is directly applicable to those wishing to invest. If you are investing and you want to accomplish what most investors set out to do, gain capital, you must know how your investments are affected by microeconomic trends. We will help you understand these trends so you can become the soundest investor possible. By knowing how your investments are affected, you will be able to leverage them for the most gain.

Is Microeconomics Important When Investing?

Warren Buffet said that macroeconomic forecasts have no influence on his investing decisions. Microeconomics is concerned with the details that make differences. According to Buffet, “Charlie and I don’t pay much attention to macro forecasts. We’ve worked together for 50+ years, and I can’t think of a time when they influenced a decision about stock or a company.” That may be your answer right there. Knowing the details is what will help you evaluate individual companies to form your investing decisions.

Orchard will give you that knowledge and help you create that understanding – consequently, maintaining your investments.

Most economists agree on the principles of microeconomics whereas macro is up in the air. Micro is like what creates the weather and macro is like forecasting the weather. Meteorologists agree on what causes weather, but when it comes to predicting it – no dice.

Moving deeper into microeconomics, topics like the economy of cities and the relationships between economics and psychology are covered here at length. Once your overall understanding of the economy at a small scale increases, your investment decisions will become sound standing atop your strong foundation of knowledge.

Last articles on Microeconomic Theory

Limits of Psychology
In the stock market and otherwise, people will try to apply psychology and classify different behavior as having this or that meaning. This school of thought is known as behaviorist and it contrasts with classical approaches, not just in finance but in many fields such as economics and the law. There are real limits to behavioral approaches, primarily in that by attributing meaning to a specific behavior instead of the...
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Trading Mentality: Facts not Symbols
In trading, mistakes are plentiful and unanticipated outcomes happen often. As such it is important to correct oneself with facts and not use symbols as we can read just about anything out of symbols but the easiest thing to read out of symbols is the intentions of the other party. Once you read the intentions out of the symbols, you are just about done. Any more and you are straying into...
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Perceptions and Judgment
The nature of perception is to understand the world based on one’s vantage point. The nature of judgment is to reason about the world based on one’s vantage point. Frequently our perceptions shift in ways that are unexpected and we appear like we have fallen off the script. Some people may even do that to us deliberately by challenging us that we are speaking from a script in the first...
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