Question

Which of the following BEST defines microeconomics in general?

A) Microeconomics examines the entry and exit of firms into the market.

B) Microeconomics examines optimal portfolios and corporate financial behavior.

C) Microeconomics deals with the economic interactions of entities; it is the study of markets.

D) Microeconomics examines wages, employment, and labor market dynamics.

Answer 1

C

Step-by-step explanation:

By the process of eliminiation, answer choices B and D are incorrect. It can't be A since it restricts the study to just firm activity in markets. Thus, the only answer that encompasses all, or the most correct, components of microeconomics is answer choice C.

Answer 2

(C) Microeconomics deals with the economic interactions of entities; it is the study of markets, is the correct answer.

Step-by-step explanation:

The social science which deals with the implications of human actions especially how their decision affects the utilization and distribution of scarce resources is called Microeconomics. It shows the reason for different goods have different values, how individuals make efficient decisions and how they coordinate and cooperate with others. It is considered to be an advanced, complete science than Macroeconomics. It also studies various tendencies that are likely to happen due to the choices made by individuals or if the factors of production change. In this, the individuals are grouped in subgroups e.g Buyers, sellers. These groups create demand and supply for resources by using interest rates and money as a mechanism for coordination.