What is microeconomics? State its vital components?

Answer :

When economic problems or economic issues are studied considering small economic units like an individual consumer or an individual producer, we are referring to microeconomics.

Vital components of Microeconomics are:

1. Theory of Consumer Behaviour : It analysis how a consumer allocates his income to different uses so that he maximizes his satisfaction.

2. Theory of Producer Behaviour : It analysis how producer make a choice on the uses of different input and decides what to produce and how much. The producer focuses on maximization of profit.

3. Theory of Price : It explains how prices of goods and services are determined in the product market and how prices of factor services are determined in the factor market.

(Read: branches of economics)