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

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

Answer: (D)

Verified step by step guidance

1. Understand that microeconomics focuses on the behavior and decision-making processes of individual economic agents, such as households and firms.
2. Recognize that microeconomics studies how these agents interact in specific markets to determine prices, quantities, and resource allocation.
3. Differentiate microeconomics from macroeconomics, which deals with aggregate economic variables like national income, inflation, and unemployment.
4. Note that topics like government fiscal and monetary policy, as well as international trade and exchange rates, are primarily studied under macroeconomics or international economics.
5. Conclude that the primary focus of microeconomics is the study of individual markets and the decision-making of households and firms.