The ancient Greeks referred to all of Iran by the name 'Persia,' after the Parsua people of the ruling central region of 'Pars' with which they were most familiar. And the European West borrowed this term from the Greeks and the name has stuck to this day.

In a parallel irony, Greece is known as ‘Younan’ in Persian.

This is because the part of Greece that was most thoroughly colonized by Iran’s Achaemenian Empire was called 'Ionia.'

It turns out, the Iranians also used a short hand for the Greeks and referred to them all with the name of the region that they were most familiar with.