Micro Static

 

Demand and supply are two principal variables that determine the equilibrium level for market. The quantity demanded of a good at a time is generally considered to be related to the price of that particular time. Same way supply is also related to price at particular static time. Thus microeconomics tries to find out the equality of demand and supply at a particular point of time or static time. This static analysis is the study of static relationship between two variable called demand and supply, which is known by micro static. In other words, if the functional relationship is established between two principles variable at a same period of time, such analysis is known by micro static. This situation is also known by equilibrium situation of variables. This equilibrium determines the equilibrium price and quantity. According to Schumpeter, “By static analysis, we mean, method of dealing with economic phenomena that tries to established relations between elements of the economic systems-prices and quantities of commodities all of which have the same time subscript, that is to say, refer to the same point of time.” He further said, “Static analysis tries to establish relation between elements of the economic system which refer to the same point of time.”

The concept of micro static is given below with the help of diagram.

In the diagram given above, DD shows demand curve and SS shows supply curve. Both curves intersect at point ‘E’ that gives the equilibrium price- P and quantity- Q at particular time period. This is static analysis.

 

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