Question

Distinguish between the following.

Micro Economics and Macro Economics.

What is difference between micro and macro economics?

Give two basic differences between micro economics and macro economics.

How is macro economics different from micro economics?

Differentiate between micro and macro economics. Give two examples of each.

Answer 1

Sr. No.	Points	Micro economics	Macro economics
1.	Meaning	Microeconomicsdeals with the economic behaviour of various economic units in the economy, such as particular firms, particular households, prices of individual products, wages in particular industry, etc.	Macroeconomics is concerned with the economic behaviour of aggregates in the economy, such as general price level, total production output, national income, etc.
2.	Allocation of resources	Microeconomicsis concerned with the allocation of resources for the production of particular goods.	Macroeconomics deals with the allocation of resources in the economy as a whole.
3.	Approach	Microeconomic analysis is based on partial equilibrium analysis. It considers other things constant.	Macroeconomicanalysis is based on general equilibrium analysis. In macroeconomics, everything depends on everything else.
4.	Issue of Aggregation	Microeconomicsdeals with aggregates of a particular industry (such as the cement industry or textile industry) with regard to output, demand, price, employment, etc., by taking into consideration the aggregation of various firms belonging to that industry.	Macroeconomics is concerned with aggregation that relates to the whole economy and not to a particular industry. For instance, macroeconomic analysis can be done in respect of total employment by considering the aggregation of all the sectors of the economy.
5.	Economic variables	Microeconomicsdeals with the behaviour of micro variables such as individual demand, wages in a particular industry, prices of a particular products, etc.	Macroeconomics is concerned with the behavior of macro variables such as a general price level, employment in the country, national income, total savings and investments.
6.	Method of Study	Microeconomicsstudies each unit in detail by using the slicing method.	Macroeconomics studies the economy as a whole by using the lumping method.
7.	Examples:	Determining the price of a given product (such as cellphones), Analysis of customer behavior in a certain market.	Studying a country's inflation rate, Examining the effects of government efforts on unemployment.