Question : The study of how individuals make decisions under conditions of scarcity is a key concept in:
Option 1: Macroeconomics
Option 2: Microeconomics
Option 3: Financial economics
Option 4: Econometrics
Correct Answer: Microeconomics
Solution : The correct answer is (b) Microeconomics.
Microeconomics focuses on the behavior and decision-making of individual economic units, such as consumers, households, and firms. The concept of scarcity is central to microeconomics, as it recognizes that resources are limited relative to unlimited wants and needs. Microeconomics examines how individuals and firms allocate their scarce resources to fulfill their preferences and maximize their utility or profit. It analyzes topics such as supply and demand, production and cost theory, consumer behavior, market structures, and the efficient allocation of resources. The study of decision-making under conditions of scarcity is essential in microeconomics to understand how individuals and firms make choices to optimize their outcomes given the limited resources available to them.
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