Difference between Microeconomics and Macroeconomics

“Economics is the science which studies human behavior 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 approach strategy to analyze the economy. In other words, Microeconomics tries to understand human choices and resource allocation. Microeconomics does not decide what are the changes taking place in the market, instead, it explains why there are changes happening in the market.

The main key role of Microeconomics is to examine how a company could maximize its production and capacity, so that it could lower prices and better compete in its industry. A lot of microeconomic information can be obtained from the financial statements.

The key factors of Microeconomics are :

  • Demand, Supply, and Equilibrium
  • Production Theory
  • Costs of Production
  • Labor Economics

Examples: Individual Demand, Price of a product.

What is Macroeconomics?

Macroeconomics is a branch of Economics that depicts a substantial picture. It scrutinizes itself with the economy at a massive scale, 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 government strategies.

In Macroeconomics, we normally clarify the survey of how the nation’s total manufacture and the degree of employment are associated with features (called ‘variables’) like :

  • Cost prices
  • Wage rates
  • Rate of interest
  • Profits, etc.

by concentrating on a single imaginary good and what happens to it.

The important concepts covered under Macroeconomics are :

  1. A Capitalist Nation
  2. Investment expenditure
  3. Revenue

Examples: Aggregate Demand, National Income.

Top 6 Differences Between Microeconomics And Macroeconomics

Parameters of Differentiation Microeconomics Macroeconomics


Microeconomics studies the particular market segment of the economy Macroeconomics studies the whole economy, that covers several market segments
Deals with Microeconomics deals with various issues like demand, supply, factor pricing, product pricing, economic welfare, production, consumption, etc. Macroeconomics deals with various issues like national income, distribution, employment, general price level, money, etc.
Business Application Applied to internal issues Environment and external issues
Scope Covers several issues like demand, supply, factor pricing, product pricing, economic welfare, production, consumption, etc. Covers several issues like distribution, national income, employment, money, general price level, etc.
Significance Useful in regulating the prices of a product alongside the prices of factors of production (labour, land, entrepreneur, capital, etc) within the economy Perpetuates firmness in the broad price level and solves the major issues of the economy like deflation, inflation, rising prices (reflation), unemployment and poverty as a whole
Limitations It is based on impractical presuppositions, i.e., in microeconomics, it is presumed that there is full employment in the community, which is not at all feasible It has been scrutinized that Misconception of Composition’ incorporates, which sometimes fails to prove accurate because it is feasible that what is true for aggregate (comprehensive) may not be true for individuals too

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. To know more about Commerce concepts, stay tuned to BYJU’S.

Frequently Asked Questions

What is the difference between macro and Microeconomics?

Microeconomics is the study of economics at an individual, group or company level. Whereas Macroeconomics is the study of a national economy as a whole. Microeconomics focuses on issues that affect individuals and companies.

What is the example of Microeconomics and Macroeconomics?

Unemployment, interest rates, inflation, GDP, all fall into Macroeconomics. Congress raising taxes and cutting spending to reduce aggregate demand is macroeconomics.

How do Microeconomics and Macroeconomics are interrelated?

At last, both strategies focus on improving the economy of their certain fields and branches.

What are the two fields of Economics?

The field of Economics is divided into Microeconomics, or the study of individual markets, and Macroeconomics, or the study of the economy as a whole.


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