The branch of economic theory that deals with the allocation of resources is microeconomics. Microeconomics is concerned with the behavior of individual economic agents such as consumers, firms, and markets. It focuses on the study of how these agents make decisions and interact with one another in the market.

Microeconomics examines the allocation of resources at a smaller scale, such as the production and consumption decisions of individual firms and households. It analyzes how individuals and firms allocate their limited resources, such as time, money, and labor, to satisfy their needs and wants.

Microeconomic theory is based on the concept of scarcity, which means that resources are limited and must be allocated efficiently. It seeks to understand how individuals and firms make decisions in order to maximize their utility or profit given the constraints they face.

In microeconomics, the allocation of resources is determined by the forces of supply and demand. The supply of goods and services is determined by firms, while the demand for goods and services is determined by consumers. The interaction of supply and demand in the market determines the equilibrium price and quantity of a good or service.

Microeconomic analysis also examines the role of government in the allocation of resources. It investigates how government policies, such as taxes and regulations, can affect the behavior of individuals and firms and influence the allocation of resources in the economy.

Overall, microeconomics provides a framework for understanding how resources are allocated in a market economy and how individual decisions can impact the overall allocation of resources. It is a fundamental branch of economic theory that helps economists and policymakers analyze and understand the functioning of markets and make informed decisions to promote economic efficiency and welfare.