What is the difference between microeconomics and macroeconomics?
Before we distinguish micro economics with macroeconomics, it is very important for us to understand the meaning of terms economics, micro and macro.
Economics – It is a social science, which is concerned with the production, distribution and consumption of goods and services. It is a study of allocation of scarce resources by individuals, businesses, governments and countries to satisfy their needs.
•Micro – It means very small.
•Macro – It means large
Microeconomics is that branch of economics which deals with the behavior of individual economic unit like a consumer or single commodity etc.
Macroeconomics is that branch of economics which deals with behavior of economy as a whole like national income, aggregate consumption, etc
The basic point of difference between these two branches of economics are explained below –
Points of Difference
It is the study of individual economic units
It is the study of the economy as a whole
2. Deals with
Individual economic variables like individual demand, etc
Whole or total economic variables like aggregate demand, etc
Allocation of resources and price determination
Determination of national income and employment of resources
4. Business Application
Applied to operational or internal issues
Applied to external and environmental issues
It is helpful in determining the prices of a product along with the prices of factors of production.
It maintains stability in the general price level and resolves the major problems of economy like inflation, deflation, unemployment, etc