Micro economics

The term Microeconomics is derived from the Greek word Mikros, which means "small" and "oikonomia", which means management of a household (administration).
Microeconomics is that branch of economics which studies economic decisions made by individual economic units like an individual consumer, an individual firm etc. in detail.
Microeconomics can be regarded as the microscopic study of the economy which focuses on behaviour of individual economic agents in an economy.
The principal problem of any economy is the problem of efficient allocation of its scarce resources and equitable distribution of generated income.

Significance of Microeconomics:-
1) Microeconomics has both theoretical as well as practical importance. It is highly helpful in the formulation of economic policies of an economy to promote overall welfare of its population.

2) Microeconomics tells us how  goods and services produced are distributed among the various people for consumption through price or market mechanism.

3) Microeconomics theory shows how welfare optimum or economic efficiency is achieved when there prevails perfect competition in the product and factor markets.

4) Microeconomics analysis is also applied to the various branches of Economics such as public finance and international economics.

5) In International economics Micro economics analysis is applied to show the gains from trade.

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