Economics is the study of those activities of human beings, which are concerned, with the satisfaction of unlimited wants by using the limited resources. Micro means the millionth part. The term micro has been taken from the Greek word mikros meaning small. Under microeconomics we study the individual units like a consumer, a firm, an industry, price determination of a particular commodity etc. In short the microeconomics deals with the study of the economic problems of a single unit like a firm or small economic units or resource owners. The main objective of microeconomics is to study the principles, policies and the problems relating to the optimum allocation of resources. From the theoretical point of view it tells us the functioning of a free enterprise economy. It explains us how through the market mechanism goods and services produced in the economy are distributed.