Question

Micro economic theory studies how a free enterprise economy determines:

Answer 1

Answer:

Microeconomics studies the decisions of individuals and firms to allocate resources of production, exchange, and consumption. Microeconomics deals with prices and production in single markets and the interaction between different markets but leaves the study of economy-wide aggregates to macroeconomics.

Explanation:

I

Answer 2

Microeconomics studies how a free enterprise economy determines-:

• Price determination is done according to the interaction of various forces of the market and their interaction which leads to the overall demand and supply of goods accordingly a price is determined and set and the producer sells it at a particular price.
• Another important study is concerning the allocation of resources. It is done regarding the fulfilment of questions as to what to produce like which goods are to be produced, for whom to produce which means who is the target audience, how to produce as in which technique is to be adopted that is either labour-intensive or capital-intensive and also allocates the resources according to the required quantity which is to be produced.
• Microeconomics also studies how these firms and enterprises indulge in the processes of consumption and production of different goods and how they exchange these goods.
• So, the most important factor of study for these free enterprises is the determination of price level in the economy which gives force to the market activities taking place in a nation.

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