What is the definition of microeconomics?

Microeconomics focuses specifically on the behavior and decision-making processes of individual economic units, such as households and firms. This branch of economics examines how these entities allocate their resources, respond to changes in prices, and make choices regarding consumption and production. By analyzing these individual components, microeconomics provides insights into how they interact within the market and how these interactions affect supply and demand dynamics, pricing, and overall market efficiency.

In contrast, the other choices pertain to broader economic concepts that deal with larger aggregates, such as national economies or overall market performance, which are the domain of macroeconomics. Understanding microeconomics is foundational as it builds the groundwork for analyzing larger economic phenomena.