'Micro' focuses on the small picture. Microeconomists are therefore concerned with what individuals, households and companies do with their money.
Why should we know about them?
On an individual level, a microeconomist analyses something like supply and demand patterns in markets to help determine how much your cup of coffee should cost.
According to The Harvard Business Review,microeconomists played a critical role in the development of Amazon and the internet.
In the old days, when AT&T had a monopoly on America's telecommunications networks, "economists were instrumental in providing the intellectual rationale for the Justice Department's landmark filing of that lawsuit, and just as important, of the relief the government sought: breakup of Ma Bell's' control over both long-distance and local telephony." Now exposed to competition, AT&T began laying fibre optic cables across the country in a bid to stay ahead. These cables would go on to form "the backbone of the internet".
But unfortunately, microeconomists haven't always been getting that much credit compared to the macroeconomists.
So what's changing?
Companies such as SmarterTravel, a subsidiary of Tripadvisor, use microeconomists to study key areas of their business. "When a user lands on its website an economist-designed algorithm kicks into action. Data, including the time taken between clicks, help predict whether the user is a browsing time-waster or a potential buyer. The site is adjusted in millisecondsbrowsers see more adverts, buyers a simpler site to focus on their purchaseto maximise profit," says The Economist.
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