Microeconomics is a sub-section of economics that places attention on the behavior of individuals within a market. Unlike macroeconomics, which focuses on broadly applied regulations and trends, microeconomics is concerned with the decisions that consumers or firms make, and the factors that may determine their behavior. Microeconomics also engages with the idea of scarcity quite often, scarcity meaning the limited availability of resources. Microeconomics assumes that, under the conditions of scarcity, actors behave such that their desires are balanced with a finite supply of goods. Microeconomics seeks to determine a set of patterns which explain consumers’ behavior or firms based on the constraints of scarcity.

Price Ceiling

A price ceiling (in other words, a maximum price) is put into effect when the government believes the price is too high and sets a maximum price that producers can charge; this price must lie below the equilibrium price in order for the price ceiling to have an effect.

Marginal Analysis

In the field of economics, marginal analysis entails the examination of the final or next unit of cost or of consumption. It involves a cost-benefit analysis of business decisions—that is, understanding whether a particular decision provides enough benefits to be worth the cost of that decision.