Use or importance of micro economics

Micro economics has many theoretical and practical importance.Due to this even the neo-classical economists had concentrated on micro economics.Although Keynes popularised macro-economics,the importance of micro-economics has not declined.The importance of micro-economics can be analysed on the basis of following headings:

1. Understand the working the economy:The knowledge of micro economics is indispensable to know the working of the economy.The economy consists of public and private sector.The analysis of individual industries,wages and salary determination,individuals taxes, international trade all rests on micro-economic foundations.Similarly,most of the government activities can be analysed with same concepts applied to private sector.As for example,price determination by post office,cost of national defence.etc
2. Efficient allocation of resources:Micro economics assumes that consumers and products act rationally.The producer surveys possible course of action,measures the expected benefits and costs of each course action.He then selects those courses of action which promise greatest benefits over costs.The rational behaviour leads to best use of resources.Micro -economics teachers to make best use of resources.It suggests how to achieve a given objective with fewest resources or at least cost.Micro-economics says how resources are allocated in the production of goods and service.It says which commodity is to produce.How much to produce and why to produce.
3. Useful in business decision making :Micro-economics is applied to analyse faced by business executive.The price theory in the service of business executive is known as managerial economics.It contributes improved decision making in the areas of demand analysis,optimal production decision,pricing decision to maximise profit.It guides business men to determine the price of different goods and factors of production.