Please, Jayd, whoever you are, don't ever listen to the bolded. We hear this much, much too often and this myth has to be put to rest. Some people seemingly like to think that they are part of a small select group of exceptional people and that when people face issues, they simply "aren't smart enough to handle it" (read "not as smart as them"), while reality is much more nuanced. Believe it or not guys, mathematics, graduate economics, etc... can be learned, by a lot more people than we may think. But it requires experience, time, and an important background. Mathematic ideas (and the same can be said for economics) are mostly simple, yet they are far from common experience and are the result of centuries of worldwide work (=> you need to learn about what have been done before handling modern math. Even if you're smart. The greatest genius of all time wouldn't understand anything about it without the necessary prerequisite.). People who aren't familiar with the underlying ideas needed to understand the whole thing refer to this as "complicated". Believe me when I say that something that looks impossible to you today can become trivial after some time, when you understand some new underlying things about it. Most of the time, when some people can not handle academic material, it's because there's a prerequisite that has not been learned correctly, and they didn't take the time to actually learn/fix it. But it can be done. You don't have to be a genius to get through grad econ classes. It's easy when you have the background for it.
If you want my advise, try to understand genuinely why it didn't work. Find what was lacking. Fix it. And then you'll be fine. Believe me, it works. Don't listen to stubborn people who will simply tell you crap like "you're not good enough for it". It's too simple to be out of reach for most people. Experience and time matters. Some people will fail because they have skipped steps and did not learn what was needed. Some people will fail because they don't have the time for various reasons (health, addictions, family problems, financial problems, doing something else than going to school at the same time, etc etc), some people will fail because of pressure (and yes, in most case, dealing with pressure can be improved), and many other reasons. The most important thing is to identify the problem, and take the necessary actions to fix it. As far as research goes, it is not always true that people with the highest grades in theoretical classes will have the best ideas and will write the better papers. While there is a correlation, it's not that significant.
Sadly, you might not get another chance to prove yourself after being rejected to grad school. It you have the chance to take Micro II to redeem yourself, jump on it, unless you really think you won't have the time to do it. Later it might be too late.