• The study of economics is divided into two branches: –

1. Microeconomics and
2. Macroeconomics.

Microeconomics

• Microeconomics studies the smallest economic decision making units of the society
• Is a branch of economics that studies the behavior of individual decision making units such as consumers, resource owners, firms and individual markets in a free market economy
• The objective of microeconomics is to explain the prices and quantities determination of individual goods and services.
• Microeconomics takes into account the impact of government regulation and taxation of individual markets i.e. It analyses the forces that determines the prices and  quantities of sold items.
• The major areas of microeconomics are:

1. 1. Demand and supply analysis  
   2. Consumer theory
   3. Theory of firm
   4. Market equilibrium
   5. Market structure
   6. Distribution theory

Macroeconomics

• Is the study of bigger and complex systems
• It is the study of the behavior of economy as a whole where relationships between broad economic aggregates such as employment, prices and national income is considered.
• The economy is separated into broad homogenous categories and determinants of behavior of the aggregates are integrated to provide a model of the entire economy.
• Macroeconomics focuses on economic stabilization where business cycles are moderated by government policy
• The areas major areas of macroeconomics are:

1. 1. Economic growth and development
   2. National income
   3. Inflation
   4. Money and banking
   5. Unemployment
   6. Public finance 
   7. International trade

Reasons for Studying Economics

1. Economics enables individuals and firms to make economically rational decisions since it provides the underlying principles of optimal resource allocation. For example;  the production theory is concerned with the principles that facilitate the optimum combination of factors of production.
2. The study of economics enables individuals and organizations to appreciate the constraints imposed on economic environment that entities operates in. Economics students are able to appreciate the effects of economic variables such as inflation, exchange rates, interest rates, and money supply.
3. Development economics is concerned with reasons why societies develop and the means of accelerating development. It is crucial for citizens to appreciate the parameters that determine  the development process so that they fully contribute to facilitate and take part in solving economic problems that characterize their society.
4. Economics helps to develop logical thinking since it is an analytical subject. 
5. Economics has a profound impact on businesses and industries. Because the economy is dynamic, with many ups and downs, understanding it can help businesses and industries weather the changes, survive, and thrive.