The word “micro” means a millionth part. When we speak of micro-economics or the micro approach, what we mean is that it is some small or component of the whole economy that we are analyzing. For example, behavior or that of an individual firm or what happened in any particular industry. In micro economics what we study is that price of a particular product or of a particular factor of production and not the general price level in the country.
Micro-economics theory studies the behavior of individual decision-making units such as consumer, resources owner and business firms.
In micro economics we study following issues.
- Individual consumer’s behavior
- One product’s price.
- One individual consumer’s demand and his income.
- Study of individual firm’s location, cost, revenue, and profit.
- Remuneration of individual factors of productions.