What are the uses of microeconomics in business decision making?

Study of microeconomics helps in the decision making of business organization. Microeconomics variables such as demand and supply help business firm to analyze the quantity demanded in the market and quantity that has to be supplied in the market. With the help of microeconomics and the study of demand and supply forces, firms are able to decide the prices of goods and services. Microeconomics also solves the producer's dilemma that includes, what to produce, how to produce and in what quantity it should be produced. Scarcity is also a factor of microeconomics; understanding the problem of scarcity will help the business organization to use the resources carefully and optimally.

Microeconomics also helps a business firm to understand the behavior of people and their purchasing pattern. After understanding the income and purchasing pattern of the people, the business firm is able to take important decisions regarding the production of the products and its prices.