What Is Microeconomics and How Does It Work?

Microeconomics is a branch of social science that studies the consequences of incentives and decisions,
specifically how they affect the utilization and distribution of resources. It is also known as
microeconomics theory. In microeconomics, we learn about the origins and evolution of different goods'
values, the ways that individuals and businesses conduct themselves in order to benefit from efficient
production and exchange, and the best ways for individuals to coordinate and cooperate with one
another. Overall, microeconomics provides a more thorough and detailed understanding of the subject
than macroeconomics.

IMPORTANT TAKEAWAYS

- A microeconomics study is the allocation of resources in the production, exchange, and

consumption sectors by individuals and firms in a market environment.
- Microeconomics is concerned with the prices and production in individual markets, as well as
the interaction between different markets, while macroeconomics is concerned with the study
of aggregates at the level of the entire economy.
- Microeconomists develop a wide range of models based on logic and observed human behavior,
and then compare the models to real-world observations to determine their accuracy.