Microeconomics focuses on how markets allocate resources efficiently. In this process, price plays a key role, with fair value and price changes driving the market toward equilibrium. 1. Fair Value: The Ideal Price Fair value is the price at which informed buyers and sellers agree to trade. Significance: It reflects supply-demand balance and market efficiency. Deviations: Prices can temporarily deviate from fair value due to factors like information gaps or external shocks. 2. Price Changes: The Adjustment Mechanism Price changes help markets adjust supply and demand. Increase: Prices rise when demand exceeds supply. Decrease: Prices fall when supply exceeds demand. Dynamic Adjustment: These changes push prices back toward fair value, correcting imbalances. 3. The Essence of Microeconomics: Balance and Efficiency Microeconomics is about achieving efficient resource allocation through market balance. Role of Prices: Prices direct resources to where they are most needed. Balance: The market adjusts prices to achieve supply-demand equilibrium. Efficiency: When prices are close to fair value, resources are optimally allocated. 4. Conclusion Fair value is the goal, price changes are the tool, and microeconomics seeks to achieve efficient resource allocation through balance. The price mechanism ensures market stability and long-term efficiency.