The study of how firms make decisions regarding resource allocation is part of which economic branch?

The study of how firms make decisions regarding resource allocation falls under microeconomics because this branch of economics focuses on the behavior of individual agents, such as households and firms, and how they interact in markets. Microeconomics analyzes how these entities make choices about the allocation of limited resources to maximize their utility or profit.

Understanding microeconomics allows for a deeper insight into concepts like supply and demand, pricing, competition, and consumer behavior, which directly affect how firms decide on the use of their resources. This includes determining how much of a product to produce, setting prices, and deciding on production methods.

In contrast, macroeconomics deals with broader economic factors such as national income, overall economic growth, and inflation, which do not focus solely on the decision-making processes of individual firms. Global economics addresses international trade and finance, while environmental economics examines the economic impacts of environmental policies and resource use but does not specifically hone in on the decisions made by firms regarding resource allocation.