Self-interest, marginal decision making, and optimization form the basis for which of the following?

• A. Microeconomic theory
• B. International trade agreements
• C. Public finance
• D. Macroeconomic policy

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the key concepts mentioned in the problem: self-interest, marginal decision making, and optimization. These are fundamental ideas in economics that explain how individuals and firms make choices.
2. Step 2: Recognize that self-interest refers to individuals or firms making decisions to maximize their own benefit or utility.
3. Step 3: Marginal decision making involves evaluating the additional or incremental costs and benefits of a decision, which is central to economic analysis.
4. Step 4: Optimization means choosing the best possible option given constraints, such as budget or resources, to maximize utility or profit.
5. Step 5: Identify which field of economics primarily uses these concepts to analyze behavior and decision-making at the individual or firm level. This field is Microeconomic theory, which studies how agents optimize under constraints.