What are the theories of microeconomics?

Microeconomics encompasses several key theories that explain how individuals and firms make decisions regarding resource allocation. The theory of supply and demand illustrates how prices are determined in a competitive market based on consumer preferences and producer costs. The theory of consumer behavior analyzes how individuals maximize utility given their budget constraints, while the theory of production examines how firms optimize output based on input costs and technology. Additionally, game theory explores strategic interactions among rational decision-makers, highlighting the competitive dynamics within markets.