Microeconomics is a branch of economics that studies the behavior of individuals, households, and firms in making decisions regarding the allocation of limited resources. It focuses on how incentives and decisions affect the utilization and distribution of resources. Microeconomics shows how and why different goods have different values, how individuals and businesses conduct and benefit from efficient production and exchange, and how individuals best coordinate and cooperate with one another. Some key concepts of microeconomics include:

• Supply and demand: Microeconomics deals with prices and production in single markets and the interaction between different markets but leaves the study of economy-wide aggregates to macroeconomics.

• Consumer demand theory: This is the study of how consumers make choices about what goods and services to buy, and how much to buy, given their budget constraints.

• Production theory: This is the study of how firms make decisions about what goods and services to produce, and how much to produce, given their production technology and input prices.

• Market competition: This is the study of how firms compete with each other to sell their goods and services, and how this competition affects prices and output levels.

Microeconomics is based on models of consumers or firms that make decisions about what to buy, sell, or produce, with the assumption that those decisions result in perfect market clearing and other ideal conditions. Microeconomics provides a more complete and detailed understanding than macroeconomics.