Distinguish between:
Microeconomics and Macroeconomics
Microeconomics and Macroeconomics
Microeconomics
Macroeconomics
Definition
The branch
of economics that studies the behavior of an individual consumer, firm, producer
is known as microeconomics.
The branch
of economics that studies the aggregate units of the economy like national
income, employment, is known as macroeconomics.
Principles
Individual
economic variables
Aggregate
economic variables
Scope
Deals with various issues like demand, supply, product
pricing, factor pricing, production, consumption, economic welfare, etc.
Deals with
various issues like, national income, general price level, distribution,
employment, money etc.
Importance
Helpful in
determining the prices of a product along with the prices of factors of
production (land, labor, capital, entrepreneur etc.) in the economy.
Maintains
stability in the general price level and resolves the major problems of the
economy like inflation, deflation, deflation, unemployment and poverty as a
whole.
Limitations
It is based
on unrealistic assumptions, i.e. In microeconomics it is assumed that there
is a full employment in the society which is not at all possible
It has been
analyzed it is not always true that what is true for aggregate may not be
true for individual units too. Concepts of macroeconomics cannot be generalized.
|
Microeconomics |
Macroeconomics |
|
|
Definition |
The branch of economics that studies the behavior of an individual consumer, firm, producer is known as microeconomics. |
The branch of economics that studies the aggregate units of the economy like national income, employment, is known as macroeconomics. |
|
Principles |
Individual economic variables |
Aggregate economic variables |
|
Scope |
Deals with various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc. |
Deals with various issues like, national income, general price level, distribution, employment, money etc. |
|
Importance |
Helpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) in the economy. |
Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, deflation, unemployment and poverty as a whole. |
|
Limitations |
It is based on unrealistic assumptions, i.e. In microeconomics it is assumed that there is a full employment in the society which is not at all possible |
It has been analyzed it is not always true that what is true for aggregate may not be true for individual units too. Concepts of macroeconomics cannot be generalized. |
