Which branch of economics studies choices made by households and firms?

Microeconomics is the branch of economics that focuses on the decisions made by individual households and firms. It examines how these entities allocate their limited resources for the production, distribution, and consumption of goods and services. Microeconomics analyzes various aspects, such as consumer behavior, pricing mechanisms, and the interaction between supply and demand in specific markets. This branch of economics seeks to understand how individual economic actors make choices and how those choices impact the overall economy at a smaller scale.

In contrast, macroeconomics studies the economy as a whole, considering larger aggregate factors like national output, inflation, and employment rates. International economics looks at economic interactions between countries, including trade and finance. Behavioral economics blends insights from psychology into economic decision-making but does not exclusively focus on the choices made by households and firms in the way that microeconomics does. Thus, microeconomics is distinctly qualified to address the choices of individual economic agents.