Microeconomics is the study of the economic interactions between “consumers and producers”. In other words, macroeconomics studies companies’, individuals’, and families’ approaches to decision making related to economic issues and allocation of sources.
Microeconomics can be considered a social science that reviews the results of human activity. In particular, it reviews how individuals’ choices affect the usage and appropriation of assets. The theory of microeconomics is based on studying a single utility maximizing individual.
This type of study analyzes not only the choices people make but also the factors that lead to their decisions. For example, a family may buy low-quality products instead of higher-quality ones not because they prefer the first option but because they may have a limited budget. In other words, the goal of microeconomics is evaluating the market mechanisms involved into allocating resources and establishing prices for services and goods.
Microeconomics also indicates how and why diverse merchandise have particular qualities, how people make more proficient or more beneficial choices, and how individuals best facilitate and participate with each other.
One of the classical microeconomic models is the supply and demand one. This model determines prices in a competitive market. It explains how prices may differ as a result of the availability of products and the existing demand.
Microeconomics can be contrasted to macroeconomics. The latter can be be considered a more total, expansive, and settled study than microeconomics. Macroeconomics can be defined as the branch analyzing economy as a whole and the way it behaves. It studies the topics of inflation, rate of economic growth, gross domestic product (GDP), national income, and changes in the population’s employment.
All in all, it is possible to say that all individuals deal with the issues of microeconomics on a daily basis.