It is universal that everything which is necessary for the survival of humans and is capable of exhausting human desires is itself exhaustible in nature. Resources in this world, pitched against limitless human wants, are limited. Therefore, it becomes necessary that this limited supply of resources is allocated efficiently among different economic agents for various economic purposes.

Microeconomics analysis the market mechanism under which the prices of different goods and services are established and limited resources are allocated for the production of the same goods and services.

The price mechanism helps in the efficient allocation as the resources which are relatively scarce carry a greater price that reduces the quantity demanded by restricting a number of economic entities from accessing them and the resources which are plentiful come at a cheaper price.

If a market failure occurs under which the market results are inefficient in nature and the resources are not allocated desirably, microeconomics also provides measures to eliminate the inefficiency.