Final answer:
Microeconomics studies the behavior and decisions of individual economic agents such as households, workers, and business firms. It examines the mechanisms of supply and demand, price determination, and utility maximization within budget constraints. Microeconomics contrasts with macroeconomics by focusing on the smaller scale individual economic activities rather than the economy as a whole.
Step-by-step explanation:
Microeconomics is a branch of economics that deals with the study of the economic behaviors and decisions of individual agents such as households, workers, and firms within an economy. It focuses on the interactions between individual buyers and sellers and how these interactions affect the pricing and allocation of resources. By understanding the decisions made by these entities, microeconomics explores the dynamics of supply and demand, price determination, and how individuals maximize utility or satisfaction given their budget constraints.
Unlike macroeconomics, which looks at the economy as a whole, microeconomics zooms in on the small-scale economic activities. It addresses issues like how goods and services are valued and traded, how resources are allocated, and how individual choices can be affected by economic policies and market changes. Economists use microeconomic theories to analyze market mechanisms that establish relative prices among goods and services and the distribution of limited resources among various uses.