What is "Micro-Economics"?
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Solution and Explanation
Step 1: Understanding the Concept:
The question asks for the definition of Microeconomics, one of the two main branches of economics. The prefix 'micro' is derived from the Greek word 'mikros', which means small.
Step 2: Detailed Explanation:
Microeconomics is the branch of economics that studies the behavior and decision-making of individual economic units, such as individual consumers, households, firms, and industries. It focuses on how these individual units make choices regarding the allocation of scarce resources.
The key areas of study in microeconomics include:
\begin{itemize}
\item The theory of consumer demand.
\item The theory of production and cost.
\item The determination of prices for individual goods and services.
\item The determination of prices for factors of production (wages, rent, interest).
\item Market structures (e.g., perfect competition, monopoly).
\end{itemize}
Step 3: Final Answer:
Microeconomics is the study of the economic actions of individuals and small groups of individuals, focusing on how prices are determined and how resources are allocated.
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