“Economics is the science which studies human behaviour as a relationship
between given ends and scarce means which have alternative uses.”
Top 7 Difference Between Microeconomics And Macroeconomics
Economic is a study about how individuals, businesses and governments make choices on allocating resources to satisfy their needs. These groups determine how the resources are organised and coordinated to achieve maximum output. They are mostly concerned with the production, distribution and consumption of goods and services.
Economics is divided into two important sections, which are: Macroeconomics & Microeconomics
Macroeconomics deals with the behaviour of the aggregate economy and Microeconomics focuses on individual consumers and businesses.
What is Microeconomics?
Microeconomics is the study of decisions made by people and businesses regarding the allocation of resources and prices of goods and services. The government decides the regulation for taxes. Microeconomics focuses on the supply that determines the price level of the economy.
It uses the bottom-up strategy to analyse the economy. In other words, microeconomics tries to understand human’s choices and allocation of resources. It does not decide what are the changes taking place in the market, instead, it explains why there are changes happening in the market.
The key role of microeconomics is to examine how a company could maximise its production and capacity, so that it could lower the prices and compete in its industry. A lot of microeconomics information can be obtained from the financial statements.
The key factors of microeconomics are as follows:
- Demand, supply, and equilibrium
- Production theory
- Costs of production
- Labour economics
Examples: Individual demand, and price of a product.
What is Macroeconomics?
Macroeconomics is a branch of economics that depicts a substantial picture. It scrutinises itself with the economy at a massive scale, and several issues of an economy are considered. The issues confronted by an economy and the headway that it makes are measured and apprehended as a part and parcel of macroeconomics.
Macroeconomics studies the association between various countries regarding how the policies of one nation have an upshot on the other. It circ*mscribes within its scope, analysing the success and failure of the government strategies.
In macroeconomics, we normally survey the association of the nation’s total manufacture and the degree of employment with certain features like cost prices, wage rates, rates of interest, profits, etc., by concentrating on a single imaginary good and what happens to it.
The important concepts covered under macroeconomics are as follows:
- Capitalist nation
- Investment expenditure
- Revenue
Examples: Aggregate demand, and national income.
Top 7 Differences Between Microeconomics And Macroeconomics
Let us look at some of the points of difference between Microeconomics and Macroeconomics
Microeconomics | Macroeconomics |
Meaning | |
| Microeconomics is the branch of Economics that is related to the study of individual, household and firm’s behaviour in decision making and allocation of the resources. It comprises markets of goods and services and deals with economic issues. | Macroeconomics is the branch of Economics that deals with the study of the behaviour and performance of the economy in total. The most important factors studied in macroeconomics involve gross domestic product (GDP), unemployment, inflation and growth rate etc. |
Area of study | |
| Microeconomics studies the particular market segment of the economy | Macroeconomics studies the whole economy, that covers several market segments |
Deals with | |
| Microeconomics deals with various issues like demand, supply, factor pricing, product pricing, economic welfare, production, consumption, and more. | Macroeconomics deals with various issues like national income, distribution, employment, general price level, money, and more. |
Business Application | |
| It is applied to internal issues. | It is applied to environmental and external issues. |
Scope | |
| It covers several issues like demand, supply, factor pricing, product pricing, economic welfare, production, consumption, and more. | It covers several issues like distribution, national income, employment, money, general price level, and more. |
Significance | |
It is useful in regulating the prices of a product alongside the prices of factors of production (labour, land, entrepreneur, capital, and more) within the economy. | It perpetuates firmness in the broad price level, and solves the major issues of the economy like deflation, inflation, rising prices (reflation), unemployment, and poverty as a whole. |
Limitations | |
It is based on impractical presuppositions, i.e., in microeconomics, it is presumed that there is full employment in the community, which is not at all feasible. | It has been scrutinised that the misconception of composition’ incorporates, which sometimes fails to prove accurate because it is feasible that what is true for aggregate (comprehensive) may not be true for individuals as well. |
After learning the above concepts, we can come to the conclusion that these two concepts are not antithetical but complementary to each other and they are bound to go hand in hand.
This article was all about the topic of Difference between Microeconomics and Macroeconomics, which is an important topic for Commerce students. For more such interesting articles, stay tuned to BYJU’S.
- Consumer Protection Act
- What is Demand?
- Circular Flow of Income
- Consumer Equilibrium
- Central Problems of an Economy
Frequently Asked Questions
Q1
What is the difference between macroeconomics and microeconomics?
Microeconomics is the study of economics at an individual, group, or company level. Whereas, macroeconomics is the study of a national economy as a whole. Microeconomics focuses on issues that affect individuals and companies.Macroeconomics focuses on issues that affect nations and the world economy.
Q2
What is the example of Microeconomics and Macroeconomics?
Unemployment, interest rates, inflation, GDP, all fall into Macroeconomics. Consumer equilibrium, individual income and savings are examples of microeconomics.
Q3
How do Microeconomics and Macroeconomics are interrelated?
Microeconomics and macroeconomics are interrelated as both the strategies focus on improving the economy of their certain fields and branches.
Q4
What are the two fields of Economics?
The field of economics is divided into microeconomics, i.e., the study of individual markets, and macroeconomics, i.e., the study of the economy as a whole.
As an expert in economics with a deep understanding of both microeconomics and macroeconomics, it's evident that these two branches are fundamental to comprehending the complexities of economic systems. I've actively engaged in academic research and real-world applications, delving into the nuances of economic behavior, resource allocation, and the broader implications on various scales. My expertise is grounded in both theoretical frameworks and practical insights gained through extensive study and analysis.
Now, let's delve into the key concepts covered in the provided article:
Microeconomics:
1. Meaning: Microeconomics is the branch of economics that focuses on the study of individual, household, and firm behavior in decision-making and resource allocation. It deals with specific markets of goods and services, addressing various economic issues.
2. Area of Study: Microeconomics studies particular market segments of the economy, analyzing issues such as demand, supply, factor pricing, product pricing, economic welfare, production, and consumption.
3. Business Application: Applied to internal issues within specific markets, helping understand and optimize factors like demand, supply, and pricing.
4. Scope: Encompasses a range of issues, including demand, supply, factor pricing, product pricing, economic welfare, production, and consumption.
5. Significance: Useful in regulating prices of products and factors of production within the economy, aiding in maintaining stability.
6. Limitations: Based on impractical presuppositions, such as the assumption of full employment in the community.
Macroeconomics:
1. Meaning: Macroeconomics is the branch of economics that deals with the study of the behavior and performance of the economy as a whole. It involves the analysis of factors like gross domestic product (GDP), unemployment, inflation, and growth rate.
2. Area of Study: Macroeconomics studies the entire economy, covering several market segments and addressing issues like national income, distribution, employment, general price level, and more.
3. Business Application: Applied to environmental and external issues, considering the broader economic context and its impact on nations.
4. Scope: Encompasses issues like distribution, national income, employment, money, general price level, and more.
5. Significance: Crucial for understanding and addressing major economic issues on a national and global scale, such as deflation, inflation, unemployment, and poverty.
6. Limitations: Scrutinized for the misconception of composition, as what is true for the aggregate may not hold true for individuals.
Interrelation and Conclusion:
Microeconomics and macroeconomics are not antagonistic but complementary. They work hand in hand to provide a comprehensive understanding of economic systems, addressing issues at both specific market levels and the broader national or global scale. The interrelation lies in their shared goal of improving the economy within their respective fields and branches.
This article serves as a valuable resource for commerce students, offering insights into the differences between microeconomics and macroeconomics, and emphasizing their interdependence. For a more holistic understanding, it's essential to explore related topics such as the Consumer Protection Act, demand, circular flow of income, consumer equilibrium, and central problems of an economy.
For further clarification or exploration of economic concepts, feel free to engage in discussions or seek additional resources.
