As most of the things in the world are scarce, the allocation of
these scarce resources becomes very important. Economics,
whether micro or macro, is needed because of this scarcity.
Microeconomics deals with individuals and firms. Microeconomics
can also be termed as the study of supply and demand. It
assumes rational behavior of consumers and perfect competition
to make mathematical models. A perfectly competitive market
adjusts the prices of goods and services by itself without any
external intervention. It also makes the business feasible for all
the players. Both the supply and demand are controlled by the
price. Businesses use several microeconomic concepts to make
important decisions like whether to expand or shrink the
quantity produced, how to maximize the profit, etc. The ultimate
objective of buyers and sellers is to maximize the utility.