March 05, 2019

Limitations Of Microeconomics

The main disadvantages or limitations of microeconomics can be highlighted as follows:

1. Unrealistic Assumptions

Microeconomics is based on some assumptions such as laissez economy, perfect competition and full employment which are unrealistic.

2. Incomplete Study

It is only the study of economic behavior of individual or unit which does not provide complete picture of whole economy.

3. No Aggregate Analysis

Microeconomics lacks aggregate analysis of employment, fiscal and monetary policy which are very important to study national economy.

4. Limited Scope

Scope of microeconomics is limited or narrow while comparing to macroeconomics.

   
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5. Static Analysis

It is based on the static analysis where variables are supposed to be constant. So, it may lead to wrong conclusion.

6. Less Reliable

Because of false assumptions, incomplete study and static analysis, it is less reliable than macroeconomics.