What aspect of economics addresses decisions related to the allocation of scarce resources?

Microeconomics is the branch of economics that focuses on the behavior of individuals and firms in making decisions regarding the allocation of scarce resources. It analyzes how these entities respond to changes in prices, supply, and demand, which all ultimately influence how resources are distributed.

In microeconomics, the central concern is with how these smaller units—consumers and businesses—make choices and what factors impact their decisions. This includes understanding trade-offs, opportunity costs, and how different market structures affect behavior and resource allocation.

By concentrating on individual decision-making processes, microeconomics provides insights into the mechanisms that drive the economy at a smaller scale, which is essential for comprehending larger economic systems and policies.