Question

Microeconomics studies

• A. Product price determination
• B. Factor price determination
• C. Economic welfare
• D. All of these

Hint:

Microeconomics answers three big questions: How are product prices set? How are wages, rent, and interest set? And how can we make the economy more efficient (welfare)?

Answer 1

The Correct Option is D

The scope of microeconomics is traditionally divided into three main areas:

Theory of Product Pricing: Explains how the prices of individual commodities like cars, clothes, and food are determined. It includes the theory of demand and the theory of production and cost.
Theory of Factor Pricing: Explains how the prices of factors of production (rent for land, wages for labor, interest for capital, profit for entrepreneurship) are determined.
Theory of Economic Welfare: Deals with the efficiency of resource allocation and how it affects the well-being of society.
All three are major components of microeconomic theory.