Which of the following best describes the primary focus of microeconomics?

• A. The study of individual markets and the decision-making of households and firms
• B. The analysis of national income, inflation, and unemployment rates
• C. The examination of international trade and exchange rates
• D. The study of government fiscal and monetary policy

Answer: (A)

Verified step by step guidance

1. Understand that microeconomics is a branch of economics that focuses on the behavior and decision-making processes of individual economic agents, such as households and firms.
2. Recognize that microeconomics analyzes how these agents interact within individual markets, determining prices, quantities, and resource allocation.
3. Differentiate microeconomics from macroeconomics, which deals with aggregate economic variables like national income, inflation, and unemployment rates.
4. Note that topics like international trade, exchange rates, and government fiscal and monetary policy fall under macroeconomics or international economics, not microeconomics.
5. Conclude that the primary focus of microeconomics is best described as the study of individual markets and the decision-making of households and firms.