Limitations of microeconomics

1. The study of microeconomics is unable to focus the collective activity of the national economy.
2. The economy policy such as taxation policy, expenditure policy of the government, monetary policy, fiscal policy etc. is assumed to be of greater importance. These policies affect the entire economy. These policies do not come within the eye of microeconomics.
3. Microeconomics assumes other things being equal and has based its results on the assumption of full employment in the society. These assumptions do not have a hold in real life.
4. Microeconomic theories assume the existence of a free existence of a free enterprise system in which the ‘invisible hands’ or market forces are assumed to play their roles freely. It assumes also the absence of any government intervention in the economic activities of the society.
5. Microeconomics is concerned with the behavior of individual elements of the economic organism and not with the organism as a whole. It provides only a partial analysis of the economic phenomenon.