Differences Between Micro and Macro Economics (With Dependencies, Examples and Comparison Table) - Key Differences (2023)

Microeconomicstalks about the actions of an individual unit, that is, an individual, company, family, market, industry, etc. On the other hand, themacroeconomicstudies the economy as a whole, that is, it does not evaluate a single unit, but the set of all, that is, companies, families, nation, industries, market, etc.

"Economics" is defined as the study of how humans work together to convert limited resources into goods and services to satisfy their (unlimited) wants and how they distribute them among themselves. Economics has been divided into two main parts, namely microeconomics and macroeconomics. There are two broad categories into which economics is classified, namely microeconomics and macroeconomics.

Here in the article in question, we detail the concept and all the important differences between microeconomics and macroeconomics, in tabular form, take a look.

Contents: Microeconomics Vs Macroeconomics

1. Comparison Chart
2. Definition
3. Main differences
4. Video
5. Pros and cons
6. interdependence
7. conclusion

Comparison Chart

Definition of Microeconomics

Microeconomics is the branch of economics that focuses on the behavior and performance of individual economic agents within the economy, such as consumers, households, industry, companies, etc. Check how limited resources are allocated among various individuals to satisfy their desires? It also specifies the conditions for the best possible use of resources, in order to achieve maximum income and social welfare.

Here, demand plays a key role in determining the quantity and price of a product, along with the price and quantity of related goods (complementary goods) and substitute products, to make a judicious decision about the allocation of scarce resources. . as to its alternative uses.

Does microeconomics look at how individuals and families spend their income? How do people decide how much to save for future contingencies? What set of goods and services best meets your limited income needs and wants?

Does it also determine what products and how many products the company must make in order to sell? At what price should the company offer its products and services to the target audience? What sources of financing should the company use to start or operate the business? How many and at what rate should workers be hired to work in the company? When should the company expand, downsize, and close?

Definition of Macroeconomics

In macroeconomics we talk about the entire economic phenomenon or the economy as a whole. Basically, it focuses on the behavior and performance of aggregate variables and issues that affect the economy as a whole.

It includes regional, national and international economies and covers the main areas of the economy such as unemployment, poverty, general price level, total consumption, total savings, GDP (Gross Domestic Product), imports and exports, economic growth, globalization, monetary policy / tax policy etc

Here we discuss how equilibrium is achieved as a result of changes in macroeconomic variables. Do you check the level of economic activity in the economy? What is the rate of unemployment, poverty and inflation in the country? What are the problems that result in the acceleration or deceleration of the economy? What is the standard of living of people in the country? What is the cost of living in the country?

Furthermore, macroeconomics not only analyzes the problems that the economy is going through, but also helps to solve them, allowing it to function efficiently.

Video: Microeconomics Vs Macroeconomics

Microeconomics

Advantage:

• It helps determine the prices of a particular product and also the prices of various factors of production, i.e. land, labor, capital, organization, and entrepreneur.
• It is based on a free enterprise economy, which means that the company is independent in making decisions.

Contras:

• The assumption of full employment is completely unrealistic.
• It analyzes only a small part of an economy, while a larger part is left untouched.

macroeconomic

Advantage:

• It helps determine the balance of payments, along with the causes of the deficit and surplus.
• It helps decide economic and fiscal policies and solves public finance problems.

Contras:

• Your analysis says that the aggregates are homogeneous, but this is not so because they are sometimes heterogeneous.
• It only covers aggregate variables that impede the well-being of the individual.

interdependence

While microeconomics focuses on the allocation of limited resources among individuals, macroeconomics examines how the distribution of limited resources among many people should be done so that it makes the best possible use of scarce resources. While microeconomics studies individual units, macroeconomics in turn studies aggregate variables.

Both believe that the nation's economic well-being is only possible when there is the best possible use of productive resources. In this way, we can say that they are interdependent. Likewise, to have a complete understanding of the economy, the study of both branches is pertinent.

conclusion

Micro and Macroeconomics are not different or contradictory disciplines, but rather complementary. As every currency has two aspects, microeconomics and macroeconomics are also the two aspects of the same currency, where the demerit of one is the merit of the others and therefore covers the entire economy. The only important point that makes them different is the area of ​​application.