Micro Economics: Micro economics is a study of particular households, particular firms, particular industries, particular commodities, particular prices etc.
Macro Economics: The word Macro is derived from a greek word ‘Makros’ which means large. Macro economics is the study of aggregates like national income, total employment, aggregate demand, aggregate supply, etc.
The following are the major difference between micro economics and macro economics.
- There is a difference in approach to economic analysis. Micro economics analyses the behaviour of individual small units composing the economy– individual firms, individual industries, prices of goods separately, employment in a firm and so on. Macro economics, on the other hand, analyses the functioning of the total economy- aggregate output, employment and general price level. As Ackley outs it, macro economics is like the study of the forest as a whole while micro economics is a study of individual groups of trees.
- Micro economics assumes that total output, total employment and total expenditure on goods as given and examines how productive resources are allocated among industries and firms. It examines output and price determination at the level of firm and industry. Macro economics assumes allocation of resources as given and analysis how total output and general price level are determined.
- Macro economics deals with aggregates-aggregate output, employment, total expenditure, savings, investment etc. These aggregates relate to the whole economy. At the same time, it discusses sub-aggregates such as total consumption, total investment etc. These sub-aggregates add up to the total of the whole economy. Micro economics examines aggregates relating to a particular product, particular market, particular industry etc.
- The subject-matter of micro economics consists in explaining the determination of relative prices of goods and factors of production. It deals with the allocation of resources among the production of different goods. Macro economic analysis explains the factors that determine the level of national income, employment and general price level and causes which lead to fluctuations in such levels. Further, macro economics examines the long term issue of economic growth.
Micro Economics and Macro Economics in Tabular Form
|It is a branch of economics that studies the behavior of an individual consumer, firm, family is known as Microeconomics.||Macro Economics branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics.|
|Applied to operational or internal issues||Environment and external issues|
|Concern with individual organization and particular thing||It concern with Aggregate of all economic variables|
|It covers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc.||It covers various issues like, national income, general price level, distribution, employment, money etc.|
|Helpful in determining the prices of a product along with the prices of factors of production within the economy.||Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment and poverty as a whole.|