Micro Economics: Microeconomics is a study of particular households, particular firms, particular industries, particular commodities, particular prices, etc.
Macro Economics: The word Macro is derived from the Greek word ‘Makros’ which means large. Macroeconomics is the study of aggregates like national income, total employment, aggregate demand, aggregate supply, etc.
The following are the major difference between microeconomics and macroeconomics.
- There is a difference in approach to economic analysis. Microeconomics analyses the behavior of individual small units composing the economy– individual firms, individual industries, prices of goods separately, employment in a firm, and so on. Macroeconomics, on the other hand, analyses the functioning of the total economy- aggregate output, employment, and general price level. As Ackley outs it, macroeconomics is like the study of the forest as a whole while microeconomics is a study of individual groups of trees.
- Microeconomics assumes that total output, total employment, and total expenditure on goods as given and examines how productive resources are allocated among industries and firms. It examines output and price determination at the level of firm and industry. Macroeconomics assumes the allocation of resources as given and analysis how total output and general price level are determined.
- Macroeconomics deals with aggregates-aggregate output, employment, total expenditure, savings, investment, etc. These aggregates relate to the whole economy. At the same time, it discusses sub-aggregates such as total consumption, total investment, etc. These sub-aggregates add up to the total of the whole economy. Microeconomics examines aggregates relating to a particular product, a particular market, a particular industry, etc.
- The subject matter of microeconomics consists in explaining the determination of relative prices of goods and factors of production. It deals with the allocation of resources in the production of different goods. The macroeconomic analysis explains the factors that determine the level of national income, employment, and general price level and the causes which lead to fluctuations in such levels. Further, macroeconomics examines the long-term issue of economic growth.
Micro Economics and Macro Economics in Tabular Form
|It is a branch of economics that studies the behavior of an individual consumer, firm, or family known Microeconomics.||Macro Economics branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics.|
|Applied to operational or internal issues||Environment and external issues|
|Concern with individual organization and particular thing||Its concern with the Aggregate of all economic variables|
|It covers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc.||It covers various issues like national income, general price level, distribution, employment, money, etc.|
|Helpful in determining the prices of a product along with the prices of factors of production within the economy.||Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment, and poverty as a whole.|