Microeconomics deals with which of the following types of analysis in economics?

Introduction / Context:
This question focuses on the basic difference between microeconomics and macroeconomics. Microeconomics looks at individual economic units such as consumers, firms, and specific markets, while macroeconomics studies the economy as a whole. Being able to distinguish between the two helps students classify problems correctly and apply the right tools and models.

Given Data / Assumptions:

• We are asked specifically what microeconomics deals with.
• The options mention single variables like demand and broader topics such as unemployment and economic growth.
• We assume standard textbook definitions of microeconomics and macroeconomics.

Concept / Approach:
Microeconomics studies individual decision making by consumers, firms, and resource owners, and the functioning of individual markets such as the market for a particular product. It deals with demand and supply for individual goods, price determination, production decisions, and market structures. Macroeconomics, in contrast, focuses on aggregate variables such as national income, general price level, total employment, and overall growth. The question looks for the option that correctly captures the micro level viewpoint.

Step-by-Step Solution:
Step 1: Examine option B, which mentions the decision making of a single economic variable like demand. Step 2: Recognise that demand for an individual product, supply by a single firm, and pricing in one market are typical microeconomic topics. Step 3: Check option A, the circular flow of income, which is usually discussed at the macro level, linking households, firms, government, and foreign sector. Step 4: Check option C, understanding unemployment, and option D, economic growth, both of which are standard macroeconomic issues. Step 5: Conclude that only option B describes microeconomic analysis correctly.

Verification / Alternative check:
Think of typical chapter titles in a microeconomics textbook: consumer behaviour, theory of demand, production and cost, market structures, and factor pricing. These topics all focus on individual markets and decision units. In contrast, chapter titles in macroeconomics textbooks include national income accounting, money and banking, inflation, unemployment, and economic growth. This comparison confirms that individual demand decisions are microeconomic, and that topics like unemployment and growth belong to macroeconomics.

Why Other Options Are Wrong:
Option A, the circular flow of income, describes how income moves between sectors in the whole economy and is a macroeconomic concept. Option C, understanding unemployment, is a macro level issue because it concerns the overall labour market and aggregate employment. Option D, economic growth, is also macroeconomic, involving long term expansion in national income and productivity. None of these options describes the study of individual variables and markets, so they are not correct for microeconomics.

Common Pitfalls:
Students sometimes assume that any topic involving money or markets is microeconomic, and any topic involving government is macroeconomic, which is an oversimplification. The correct way is to ask whether the issue involves aggregates for the entire economy or individual units. Another mistake is to confuse the circular flow of income diagram with micro level income flows, even though it actually represents an entire economy. Keeping this aggregate versus individual distinction in mind avoids confusion.

Final Answer:
Microeconomics deals with the decision making of a single economic variable like demand and the behaviour of individual economic units.