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Microeconomics is like looking at the economy through a microscope to understand the affect of individual decisions that costs for the demand and supply in the market. It is a core part of economics that deals with study of every producer and consumer who are the most important components of microeconomics. This is so because a consumer is the one on whose demand, goods are made by a supplier. Thus, we can conclude that it is the study of human behaviour that has an adverse effect on demand and supply in any market.
Moral hazard –
There is also a situation when any one of two of these market players has access to information either different or imperfect, that the other does not have that result in undesirable chaos. It also affects decision-making or transaction confusions. This is a typical situation of asymmetric information. Along with this, there is also a situation of moral hazards, where one of the players will take a risk as the cost incurred will not be affecting the risk taker. It will for sure harm another player at the end of financial transactions. In relevant to information that is asymmetric, moral hazard may happen if one of the parties shield off from all risks as it might have more information than another party.
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