Distinction between microeconomics and Macroeconomics
Microeconomics is the study of individual economic units of an economy whereas macroeconomics is the study of aggregates of an economy as a whole. For example, when we study of an individual sugar mill manufacturing sugar, our study is micro analysis but if we study the entire sugar manufacturing sector of the economy, our study is macro analysis.
Also please note if we study the problem of production of a firm, our analysis is micro study but if we study the problems of production of the whole economy, our analysis is macro study. Both Microeconomics and Macroeconomics are inter-dependent and complementary.
The main difference between the Microeconomics and Macroeconomics are as follows:
Microeconomics
Macroeconomics
1. It is the study of individual economic units of an economy
It is the study of economy as a whole and its aggregates.
2. It deals with individual income, individual prices and individual output, etc.
It deals with aggregates like national income, general price level and national output, etc.
3. Its Central problem is price determination and allocation of resources.
Its central problem is determination of level of income and employment.
4. Its main tools are demand and suply of a particular commodity/factor.
Its main tools are aggregate demand and aggregate supply of economy as a whole.
5. It helps to solve the central problem of what, how and for whom to produce in the economy
It helps to solve the central problem of full employment of resources in the economy.
6. It discusses how equilibrium of a consumer, a producer or an industry is attained.
It is concerned with the determination of equilibrium level of incoem and employment of the economy.
7. Price is the main determinant of microeconomic problems.
Income is the major determinant of macroeconomic problems.
8. Examples are: individual income, individual savings, price determination of a commodity, individual firm's output, consumer's equilibrium.
Examples are: National income, national savings, general price level, aggregate demand, aggregate supply, poverty, unemployment etc.
You May Also Find These Documents Helpful
-
Compare and contrast microeconomics and macroeconomics. How do the two approaches interrelate? Use a specific example to explain.…
- 253 Words
- 2 Pages
Satisfactory Essays -
Macroeconomics is the study of a country's overall economic issues such as performance, structure, behavior, decision making, and study rates. Microeconomics focuses on smaller economic units such as individual consumers, families and businesses. They can affect how much and what you can buy for your family.…
- 1790 Words
- 7 Pages
Powerful Essays -
The economy is divided into two categories microeconomics and macroeconomics. Microeconomics refers to the study of individual’s behavior within the economy. It concentrates on factors that influence the individual’s economic choices based on economic forces. The study of individual’s behavior when it comes to supply and demand is an important element to microeconomics. The law of demand says that the quantity demanded increases as the price falls or decreases as the price rises. An individual can have many wants, but it is restricted by their ability to pay for the goods. The law of supply says that as the quantity of supply rises as the price rises and falls as the price falls. Macroeconomics studies the economy as a whole. It mainly deals with issues with inflation, unemployment, business cycles and growth.…
- 824 Words
- 3 Pages
Good Essays -
Macroeconomics examines either the economy as a whole or its basic subdivisions, such as the government, household, and business sectors. Macroeconomics seek to obtain an overview or general outline of the structure of the economy relationship of its major aggregates. We can see it as an economic measure of total output, total employment, total income, aggregate expenditure, and the general level of prices in analyzing various economic problems. On the other hand microeconomics is the part of economics concerned with individual units such as a person, a firm, or industry. At this level economist observe the detail of an economic unit, or very small segment of the economy. Micro measures the price of a specific product, the number of employees in a small business, the revenue of a particular…
- 637 Words
- 3 Pages
Good Essays -
Macroeconomics looks at the economy as a whole. It focuses on bigger issues that impact the economy for example government deficits, economic growth, and many more issues. Microeconomics examines the actions of individuals or individual firms. Microeconomics looks at the economy on a smaller scale instead of the economy as a whole it breaks it down into smaller parts. It focuses on the economy consumer behavior, individual labor markets, and supply and…
- 74 Words
- 1 Page
Satisfactory Essays -
According to Investopedia “The field of economics is broken down into two distinct areas of study: microeconomics and macroeconomics. Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area. Macroeconomics, on the other hand, looks at the big picture (hence "macro"). It focuses on the national economy as a whole and provides a basic knowledge of how things work in the business world.”…
- 569 Words
- 3 Pages
Satisfactory Essays -
Microeconomics is the study of decision making undertaken by individuals (households) and by business firms. Micro looks at the decisions of individual’s actions, like deciding to work overtime or not. Another example is a small business decision on how much to spend of advertising cost. Micro focuses on the supply and demand in an economy, and how businesses can maximize profits. Macroeconomics is the study of the behavior of the economy as a whole. Macro deals with national items like the unemployment rate, government budget deficit, and money supplied by the…
- 2020 Words
- 9 Pages
Better Essays -
When you are at the beach, you see the amount of sand and the amount of shells and rocks; this is a classic example to differentiate macroeconomics and microeconomics. The shells and the rocks are microeconomics.…
- 664 Words
- 3 Pages
Good Essays -
On the other hand, microeconomics is the decisions that are made on a smaller scale based on the factors that result in such decisions and how others are affected by those decisions. These decisions are made by individuals and groups such as a household for example (Moffatt, M., n.d).…
- 452 Words
- 2 Pages
Satisfactory Essays -
will cover general equilibrium. (A separate syllabus will be distributed for the second half.) In…
- 1901 Words
- 8 Pages
Powerful Essays -
The greatest responsibility that leaders in public policymaking have is to serve the public. The public constitutes not only those who elect a leader, but anyone who’s lives could be affected by the decisions made by that leader. These decisions may have lasting impacts on future generations and across borders and so necessitate a leader who has a conception of things as they are today but also as they could be in the future. Therefore, to serve the public to the greatest degree possible, the ideal ethical leader must embody certain leadership skills to enable him or her to work more effectively with those around them. The ideal ethical leader should also embody certain ethical and moral philosophies to make sure that the actions and/ or decisions that he or she takes are not in his or her interest, but in the interest of the public and in improving the lives of those they serve. Additionally, the ideal ethical leader should work in a collaborative effort when possible to ensure that policy decisions are balanced. Moreover, the ideal ethical leader should follow a transformational approach to leadership with sentiments of both the skills and situational approach to leadership along with a utilitarian and duty perspective on ethics and moral philosophy grounded on justice’s theory concern for those least privileged in society. A leader who follows these leadership skills and ethical and moral philosophies will be more apt to make decisions that are not based on any personal interest, but in the interest of those whom he or she is ultimately responsible to – the public.…
- 2475 Words
- 10 Pages
Powerful Essays -
growth that were the result of social decisions in both the public and private sectors. It…
- 603 Words
- 3 Pages
Satisfactory Essays -
Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets.…
- 3607 Words
- 13 Pages
Powerful Essays -
B. it increases the productive capacity of an economy with a rise in the quality of resources available.…
- 884 Words
- 4 Pages
Better Essays -
Microeconomics is the study of the behavior of individual economic units: consumers, firms, workers and investors.…
- 17422 Words
- 70 Pages
Powerful Essays