The Major Importance of Economics

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The mentioned book of Smith has been divided into four parts. consumption, production, exchange and distribution of wealth. He came up with an opinion that the wealth, goods and service are produced in every country in accordance with some laws. Concerning the exchange and with regard to the distribution of wealth, he developed some laws for mutual exchange and with regard to the distribution of wealth.Here we only concerned with the microeconomics and will analyze the topics which come under the umbrella of microeconomics. Let’s have a glance over the microeconomics to get an idea of what is microeconomics is all about?Microeconomics is the branch of economics which deals with the behavior of individual entities such as market, firms and households. Analysis of market mechanism that establishes relative prices among the goods and the services is one of the primary goals of microeconomics. The two words micro economics mean the millionth part. We are here concerned with the small part of a country’s economy if we are about to learn microeconomics. We have to assume full employment and the average price level is fixed while studying microeconomics. Macroeconomics analyzes the market behavior of individuals and firms to understand the decision-making process of firms and consumers. The connection between the individual buyers and sellers is amply elaborated in microeconomics, it focuses on the basic theories of supply and demand and seeks the answers of certain questions like, how much to produce and how much to charge it? And what is the right time to penetrate the market in perfect competition? We will go into the details of supply and demand after capturing an idea about the perfect market competition.A market has an enormous number of buyers and sellers present in it who penetrate in the market with the same intentions and set of minds which is to facilitate the customers and to create a surplus.