Distinction between Microeconomics and Macroeconomics Essay
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
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.