What's microeconomics? Explain it's uses/importance.

 Microeconomics... 

The term'micro' seems to have derived from Greek word 'mikros' meaning small. So microeconomics deals with the analysis of individual economic units and small group of individual economic units and their interaction with individual economic variables. For example: individual consumer, business firms, industries, price of a commodity, output of individual firm and so on. It studies how the different units carry out their economic activities, how they attain the level of maximum satisfaction and how they reached the point of equilibrium. It has the objective of studying principles, policies and problems relating optimum allocation of limited resources. According to K. E Boulding, "Microeconomics is the study of particular firms, particular households, individual price, wages, incomes and particular commodities".

         It tries to explain how an individual consumer distributes his/her disposable income between or among the goods and services, how he/she reached the point of equilibrium and how he/she attain the level of maximum satisfaction. Simply, it also tries to explain how an individual firm decided what to produce?, how much to produce?, how to produce? etc as well as how and on what basis product and factor pricing are determined. Therefore, it's also called price theory. It's the study of an individual tree of the whole jungle. It's the micro-scopic study of various elements of economic system and not with the system as a whole. It's also termed as worm's eye view analysis of economic system. 

        Microeconomics has both theoretical and practical importance which are as follows:

1. It helps to take economic decisions related to consumption, production, exchange and distribution. 

2. It helps to determine prices of produced goods and services as well as prices of factors of production. 

3. It's helpful for the efficient allocation of limited resources between or among the various goods and services. 

4. It helps to understand the functioning of free market economy in which consumers and producers are free to carry out their economic activities. 

5. It helps to formulate and implement various types of economic policies for the overall development of the country. 

6. It's also helpful to study human behavior regarding the consumption of goods and services. 

7. It helps to achieve maximum social welfare by solving various types of economic problems. 

8. It helps to study the various aspects of international trade like export, import, foreign exchange etc. 

9. It's also helpful for the prediction of economic activities in future like quantity Sold of a commodity , production and productivity of different sectors of an economy, etc. 

10. It helps to study and expand various concepts of macroeconomics.