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.