Difference between Micro Static and Micro Dynamics

Microstatic is the study of the static relationship between different microeconomic variables and deals with the final position equilibrium of these variables at a particular point in time. Microdynamics explains the process by which the system moves from one equilibrium point to another and describes the happenings in the market during the period of transition from one equilibrium point to another.

The concepts of micro statics and micro dynamics are used to explain the behavior of individual economic units, such as consumers, firms, and markets, in microeconomics. Using micro statics, economic variables can be analyzed at a given point in time, providing insight into the decisions made by economic agents and how these decisions affect the economy as a whole. Microstatistics has several subtopics.

Consumer theory: Using consumer demand, indifference curves, and utility functions, it examines how consumers make decisions based on preferences and budget constraints.
Producer theory: An analysis of the production function, cost curves, and profit maximization is performed in order to understand how firms make decisions about production.
Market equilibrium: An equilibrium market is determined by the interaction of supply and demand. It involves analyzing the market demand curve and supply curve, as well as price elasticity and market equilibrium determinants.

On the other hand, micro dynamics examines how economic variables change and evolve over time. A microdynamics course examines how economic agents adapt to changing circumstances and how these adaptations affect the economy. Some of its subtopics include:

Game theory: Economic equilibrium is established by analyzing games, strategies, and equilibria that occur between economic agents to achieve their objectives.
Information economics: It encompasses analysis of adverse selection, moral hazard, and signaling in situations where information is incomplete or asymmetric.
Industrial organization: It involves analyzing factors such as market power and entry barriers, as well as strategic decisions made by firms in different market structures.

To summarize, micro statics and micro dynamics are complementary approaches to analyzing microeconomic behavior. A microdynamic analysis examines how economic variables change and evolve over time, while a micro static analysis analyzes economic variables at a particular point in time. It is important to understand both economic agents’ behavior and market functioning in order to understand the behavior of economic agents.