The branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets (e.g. coffee industry).

The field of economics is broken down into two distinct areas of study: microeconomics and macroeconomics. Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area.

Macroeconomics, on the other hand, looks at the big picture (hence "macro"). It focuses on the national economy as a whole and provides a basic knowledge of how things work in the business world. For example, people who study this branch of economics would be able to interpret the latest Gross Domestic Product figures or explain why a 6% rate of unemployment is not necessarily a bad thing. Thus, for an overall perspective of how the entire economy works, you need to have an understanding of economics at both the micro and macro levels.

Investment dictionary. . 2012.

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  • microeconomics — microeconomic, adj. microeconomist /muy kroh i kon euh mist/, n. /muy kroh ek euh nom iks, ee keuh /, n. (used with a sing. v.) the branch of economics dealing with particular aspects of an economy, as the price cost relationship of a firm. Cf.… …   Universalium

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  • microeconomics — noun plural but usually singular in construction Date: 1943 a study of economics in terms of individual areas of activity (as a firm, household, or prices) compare macroeconomics • microeconomic adjective • microeconomist noun …   New Collegiate Dictionary

  • microeconomics — noun That field of economics that deals with the small scale economic activities such as that of the individual or company …   Wiktionary

  • microeconomics — mi|cro|ec|o|nom|ics [ˌmaıkrəuekəˈnɔmıks, i:kə US krouekəˈna: , i:kə ] n [U] the study of small economic systems that are part of national or international systems →↑macroeconomics >microeconomic adj …   Dictionary of contemporary English

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