Microeconomics is a fundamental branch of economics that examines how individuals and firms make decisions regarding scarce resources and interact within markets. It focuses on individual markets, sectors, or industries, contrasting with macroeconomics which studies the economy as a whole. A key goal is to analyze market mechanisms that establish relative prices and allocate resources, while also identifying instances of market failure.

Historically, its study was shaped by Léon Walras's general equilibrium theory (1874) and Alfred Marshall's partial equilibrium theory (1890). Central to microeconomics is the concept of a rational, utility-maximizing individual who seeks to maximize satisfaction within budget constraints, forming the bedrock of consumer theory. This utility maximization problem is crucial for explaining both what and why individuals make economic choices.