With a neat labelled diagram explain the formation of image in a simple microscope.

A simple magnifier or microscope is a converging lens of small focal length.            

In order to use such a lens as a microscope, the lens is held near the object, one focal length away or less, and the eye is positioned close to the lens on the other side. An erect, magnifier and virtual image of the object is formed at a distance so that it can be viewed comfortably, at 25 cm.
If the object is at a distance f. the image is at infinity. The image formed at infinity is often considered most suitable for viewing by the relaxed eye.