Microeconomics is one of the two major branches of economics (microeconomics and macroeconomics). The word itself is a simple attachment of the word “economics” to a greek prefix “micro-” which means small. The term alone pretty much explains itself.

In contrast to macroeconomics which looks at the broad picture of the economy, microeconomics is all about the study of economics at individual level, the small building blocks of the economy. It places special attentions on the behaviour of individual person, group, firm, or industry in decision-making concerning scarce resources allocation, and the outcome of those decisions. In other words, we can also say that microeconomics deals with buyer-seller interactions and the factors that influence the choices they make, which ultimately determine the equilibrium point of price and quantity of products and services in individual markets. Suffice to say, microeconomics is where economics begins. Think about microeconomics as the study of atoms and molecules, while macroeconomics is the study on the grand-scale about stars and galaxies.

And, rather than two opposing forces, Microeconomics and Macroeconomics are two equally significant and complementary sides of economics. Thus, only with a strong fundamental understanding of microeconomics can you fully grasp macroeconomics.