The term ‘micro’ is derived from a Greek word “mikros” whose meaning is small. Thus microeconomics denotes the study of small individual activities. Microeconomics studies the economic action and behavior of individual units and small group of individual units. Thus it is a branch of economic analyses that studies the economic behaviors of individual firm, a person, particular household etc. in micro economic theory it is discussed how the various cells of economic organism-the various units of economic such as thousands of consumers, thousands of producers or firms, thousands of workers, resources, in the economy, do their economic activities and get their state of equilibrium. It tells us how different individual sectors get maximum satisfaction with in their limited resource utilization. According to K.E. Boulding, “Micro economics is the study of particular firms, particular household, individual prices, wages, incomes, individual industries, particular commodities.” According to Edward Shapiro, “Micro economics is concerned not with total output, total employment or total spending but with the output of particular goods and services by single firm of industries and with the spending particular goods and services by single households or by households in single market.” Thus microeconomic theory tries to find out the mechanism that helps to attend different economic units of equilibrium, proceeding from the individual units to firm or industry. The study and analyses of microeconomics is supposed to be initiated from the age of father of Economics Adam Smith. He developed the concept of economics and became the leader of classical group of economist. Thus microeconomics becomes the study matter for all classical economists. Other economist like, T.R. Malthus, David Richard, puts the concept of microeconomics forward, etc. classical economist had great belief on self-interest and free market activities where free competition is determinant factor. Aim of free competition is to maximize the satisfaction in consumer side and in other side, producer’s side better allocation of resources to minimize the cost. This implies to get economic efficiency that indicates the fair allocation of resources. This economic efficiency includes:
- Efficiency in production.
- Efficiency in distribution and consumption.
- Efficiency in overall economic sector