Economics is the study of the relation of man's wants to his resources. For convenience, it has become customary to divide the field into two subgroups, and to teach them in separate courses, although the same kind of reasoning and analysis really underlies both, However, they are used to answer different kinds of questions..
One subfield concentrates on the theory of choice-how much labor and how much capital should be used to produce a given output, or how does a household divide its income between various goals? Many aspects of these problems are discussed, but the essential focus is on individual firms and households and their behavior. Because such analysis concentrates on the smallest economic units, it is called mi croeconomics. It can then be used to examine relative prices of different goods, the effect of particular tax systems on certain industries, factors influencing particular wages, and a host of other problems of public and private policy. The common element in all such analysis is the study of specific parts of the economy.