Micro is a Latin word which means one millionth part or very small part. Making analysis of individuals in economics is called micro economics.
For example: Discussion of a single tree in whole forest e.g. consumer’s behavior, price mechanism, firm’s behavior, distribution of wealth etc.
The factors which we will discuss in micro economics are as follows:
Consumer behavior in market is analyzed that how individuals satisfies their maximum wants with limited resources.
In it we discuss how to bring equilibrium between demand and supply of a goods.
In this part of micro economics we discuss that how a firm can achieve maximum profit.
Distribution of wealth:
In micro economics we also discuss that how money can be distributed among four factors of production e.g. rent, wages, interest, and profit. These all factors are defined as follows:
Getting money through a property is called rent.
Wage is getting money as a reward on doing some sort of mental or physical work.
Interest is charging extra money on loan.
Profit is getting more money by investing some wealth in any business.