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Incentives and behaviors: This concept talks about how people are going to react in any particular situation.


Utility theory: Another concept that is used in microeconomics is Utility theory. Here consumers choose to consume and purchase the combination of the goods that will help them maximize their happiness or Utility subject, to the point of getting an understanding of how much income people have for spending.


Production theory: This is a concept that is used for studying the production of converting inputs into outputs. Producers seek to select the combination of inputs and the methods used for involving them which will be used for maximizing the cost for maximizing the profits.

Price theory: Production and utility theory interacts with the theory of demand and supply which further helps in determining the price in a competitive market. Now price theory is the one that concludes whether the price which was demanded by the consumers and the price which was set by the consumers are the same or not.

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