Microeconomics is the branch of economics that focuses on the behavior of individual consumers and firms. It studies how people make decisions about what to buy, how much to work, and how to allocate their resources. For example, when a family decides to spend their budget on groceries instead of entertainment, they are making microeconomic choices that reflect their preferences and needs.
Additionally, microeconomics examines how these individual choices affect supply and demand in the market. It looks at how prices are determined and how they influence the production of goods and services. Understanding microeconomics helps us grasp concepts like market equilibrium and consumer surplus, which are essential for analyzing economic activity.