The actors within an economy play a significant role in its function. These actors include groups like buyers, sellers, business owners et cetera. Microeconomics is the study of how the decisions made by these groups of people, their interaction and behaviours affect the economy. Key factors include the supply, demand, prices and taxes on goods. This is in comparison to macroeconomics, which is a study of the aggregate economy.
For example…
Take an economy that is experiencing inflation. Due to the higher prices of goods and services, there will be a need for businesses to increase the end product price, owing to an increase in raw material costs. To the group of actors, the buyers, this might have a huge impact, they might avoid buying that product or look for alternatives. To the other group of actors, the sellers, it might mean ceasing product production. Either way, the influence of inflation is causing groups of actors to behave in particular ways. Microeconomics is the in-depth study of these factors.
