Difference between Microeconomics and Macroeconomics

“Economics is the science which studies human behaviour as a relationship
between given ends and scarce means which have alternative uses.”

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 circumscribes 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:

1. Capitalist nation
2. Investment expenditure
3. Revenue

Examples: Aggregate demand, and national income.

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.

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