Which area of economics focuses on individual households and specific markets?

Microeconomics is the area of economics that focuses on the behavior and decision-making processes of individual households and specific markets. It examines how consumers and firms interact in specific sectors, how they respond to changes in prices and income, and how these interactions shape supply and demand dynamics. By analyzing the choices made by small economic units, microeconomics helps to explain the mechanisms behind market efficiency and resource allocation at a granular level.

In this context, microeconomics addresses issues such as pricing strategies, consumer preferences, and the elasticity of demand, providing insights that can inform business decisions and public policies. It also encompasses the study of individual goods, services, and the factors influencing their production and consumption. This focus on small-scale economic activity distinguishes microeconomics from macroeconomics, which looks at the economy as a whole, including overall trends and large-scale economic phenomena.