Microeconomics Studies Individual Markets and Behaviors

Steps:

• Define microeconomics as the branch of economics analyzing individual agents, firms, and markets.
• Contrast with macroeconomics, which examines economy-wide aggregates like national income or inflation.
• Evaluate each choice: A involves national aggregates (macro); B concerns economy-wide trade (macro); C focuses on a single good's price effect (micro); D addresses overall inflation causes (macro).
• Select the choice aligning with microeconomic scope.

Why C is correct:

• Microeconomics examines how price changes affect quantity demanded for a specific good, per the law of demand.

Why the others are wrong:

• A: National income calculation is macroeconomic, using aggregates like GDP.
• B: Exchange rate effects on trade balance involve economy-wide flows, a macroeconomic topic.
• D: Demand-pull inflation analyzes broad price level rises, falling under macroeconomics.

Final answer: C