Micro & Macro Economics - Introduction to Business Economics, Business Economics & Finance | Business Economics & Finance - B Com PDF Download

DEFINITION OF MICRO ECONOMICS

Microeconomics is the branch of economics that concentrates on the behaviour and performance of the individual units, i.e. consumers, family, industry, firms. Here, the demand plays a key role in determining the quantity and the price of a product along with the price and quantity of related goods (complementary goods) and substitute products, so as to make a judicious decision regarding the allocation of scarce resources, concerning their alternative uses.

Examples: Individual Demand, Price of a product, etc.

DEFINITION OF MACRO ECONOMICS

Macroeconomics is the branch of economics that concentrates on the behaviour and performance of aggregate variables and those issues which affect the whole economy. It includes regional, national and international economies and covers the major areas of the economy like unemployment, poverty, general price level, GDP (Gross Domestic Product), imports and exports, economic growth, globalisation, monetary/ fiscal policy, etc. It helps in resolving the various problems of the economy, thereby enabling it to function efficiently.

Examples: Aggregate Demand, National Income, etc.

Key Differences between Micro and Macro Economics

The points given below explains the difference between micro and macro economics in detail:

1. Microeconomics studies the particular market segment of the economy, whereas Macroeconomics studies the whole economy, that covers several market segments.
2. Micro economics stresses on individual economic units. As against this, the focus of macro economics is on aggregate economic variables.
3. While microeconomics is applied to operational or internal issues, environmental and external issues are the concern of macro economics.
4. Microeconomics deals with an individual product, firm, household, industry, wages, prices, etc., while Macroeconomics deals with aggregates like national income, national output, price level, etc.
5. Microeconomics covers issues like how the price of a particular commodity will affect its quantity demanded and quantity supplied and vice versa while Macroeconomics covers major issues of an economy like unemployment, monetary/ fiscal policies, poverty, international trade, etc.
6. Microeconomics determine the price of a particular commodity along with the prices of complementary and the substitute goods, whereas the Macroeconomics is helpful in maintaining the general price level.
7. While analysing any economy, micro economics takes a bottom-up approach, whereas the macroeconomics takes a top-down approach into consideration.

COMPARISON CHART

CONCLUSION

Micro and Macro Economics are not contradictory in nature, in fact, they are complementary. As every coin has two aspects- micro and macroeconomics are also the two aspects of the same coin, where one’s demerit is others merit and in this way they cover the whole economy. The only important thing which makes them different is the area of application.