Microeconomics is a special field of economics study that focuses on how

divergence in the value of different goods is brought by individual human actions

and economic behaviors. This branch of economics focuses on how decisions
made by individuals, households or a company affect the value of goods and
services. Economic behaviors exhibited by individuals, households or firms have
several implications, raging form how a product is perceived, the scarcity of s
product, how economic resources are distributed, among others. Also, when
individuals and firms interact and cooperate with one another, the effects are
also felt in the economy. These implications of decisions are studied by
microeconomics.

How does Microeconomics Work?

At the base of microeconomics is the examination of how choices made by
individuals cause significant changes in production, allocation, and distribution of
resources. This includes how demand, supply, and prices of goods and services
are affected by economic decisions made by firms, households, and individuals.
Microeconomics is different from macroeconomics give that the former deals
with the decisions and behaviors of individuals and households while the latter
focuses on the economic behavior of the whole population, it carries out an
aggregate of the impacts of behaviors and decisions made in an economy.
Microeconomics also examines the interaction between buyers, sellers and
producers of goods in the market being the major players or participants in the
demand, allocation, and distribution of resources.

The Uses of Microeconomics

Microeconomics is an important branch in economics, it has significant benefits
that place it of higher value than macroeconomics in many cases. The uses of
microeconomics are;

• Microeconomics gives insight into how certain conditions in the market are affected
by economic behaviors and decisions of individuals, households, firms, and
industries.
• It examines the impacts of human action on the prices of goods, demand,
production, allocation, and distribution of the goods.
• Microeconomics forecasts certain trends that might occur in the market due to
certain decisions or actions by individuals, firms or households involved.
• Investors and market analysts often draw market insights through microeconomics.

Method of Microeconomics
There are some core methods used in the microeconomic study, the general
equilibrium theory and partial equilibrium theory are parts of these methods.
Although these theories are categorized as the neoclassicist microeconomic
theories, they are crucial methods for microeconomics study. As developed by
Lon Walras in 1874, the general equilibrium theory focuses on using numerical
values to represent and explain human behavior as they relate to the economy.
Alfred Marshalls partial equilibrium theory was also in the same direction.

Basic Concepts of Microeconomics

There are several key concepts in microeconomics, the most prominent ones
include supply, demand, resources allocation, equilibrium, production, labor, and
many others. According to microeconomics, the economic behaviors, and
decisions of individuals, households, firms, and industries affect the supply and
demand of goods in the market. These economic behaviors can also result in an
equilibrium which is a quality of a competitive market. When equilibrium occurs,
it means the number of goods demanded is the same supplied and the amount
buyers are willing to pay for a purchase is the same sellers want to sell their
goods. Production is another key concept in macroeconomics, this relates to
how raw materials are converted into finished products or inputs into outputs.
The resources that go into the production of goods, labor costs and others are
also examined in relation to the impacts of economic behaviors of individuals
and households.