Slide 2 of 16
Associate microeconomics with the individual “trees” in a very large forest. Some of the “trees” are known as consumers, some can be referred to as resources owners, and some can be called business firms. Microeconomics studies the behavior of these individual “trees” that we also consider to be individual decision making units.
Microeconomics can also study “clumps of trees” that we can refer to as a group of consumers (ie. African-Americans between the ages of 18 to 25), a group of business firms collectively known as an industry (ie. the swine industry in North Carolina), or a group of resource owners (ie. farmland owners in North Carolina).
Of course, these broad classifications do overlap each other. Virtually everyone in our economy is a consumer of goods and services, and we shall learn that we are all resource owners as well.
When we visit a grocery store and purchase items, we are considered consumers. When we sell our physical and mental abilities to employers, we are resource owners. When we produce a good or service and sell it for a particular price, we are considered producers. So it is possible for an individual to be all three!