Microeconomics theory and analysis is useful in understanding and predicting the behaviour of firms and industries. Discuss.

Microeconomics theories explain the way in which firms and industries operate and survive under conditions where resources are scarce. Therefore simply because of this we could say that microeconomic theories and analysis is useful in understanding the behaviour of firms and industries. Hence it could be said that the firms' behaviour will depend on the scarcity of these resources, as a lot of rational choices have to be made in the everyday running of the …

…behaviour of firms and industries, as it has come to our knowledge that firms will react to external influences influences, such as government intervention. However it could be argued that there will always be exceptions to theories, perhaps because of how unstable the economy can be. Hence this topic could be taken even further to analyse unpredicted behaviour, consequently at this stage we must always consider the possibility of firms behaving in an unpredictable manner.