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Questions
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.
Distinguish Between
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Solution 1
| Sr. No. | Points | Micro economics | Macro economics |
| 1. | Meaning | Micro economics deals 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. | Macro economics 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 | Micro economics is concerned with the allocation of resources for the production of particular goods. | Macro economics deals with the allocation of resources in the economy as a whole. |
| 3. | Approach | Micro economic analysis is based on partial equilibrium analysis. It considers other things constant. | Macro economicanalysis is based on general equilibrium analysis. In macroeconomics, everything depends on everything else. |
| 4. | Issue of Aggregation | Micro economics deals 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. | Macro economics is concerned with aggregation that relates to the whole economy and not to a particular industry. For instance, macro economic analysis can be done in respect of total employment by considering the aggregation of all the sectors of the economy. |
| 5. | Economic variables | Micro economics deals with the behaviour of micro variables such as individual demand, wages in a particular industry, prices of a particular products, etc. | Macro economics is concerned with the behaviour of macro variables such as the general price level, employment in the country, national income, total savings and investments. |
| 6. | Method of Study | Micro economics studies each unit in detail by using the slicing method. | Macro economics 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. |
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Solution 2
| Basis for comparison | Micro economics | Macro economics |
| Meaning | Micro economics studies the behaviour of individual unit of an economy. | Macro economics studies the behaviour of aggregates of the economy as a whole. |
| Tools | Individual Demand and Individual Supply | Aggregate Demand and Aggregate Supply |
| Scope | Demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc. | National income, general price level, employment, money etc. |
| Importance | Price determination, Model building, Business decisions etc. | Economic fluctuations, Study of national income, Economic development etc. |
| Theory | Price Theory | Income and Employment Theory |
| Examples | Individual income, Individual output, etc. | National income, National output, etc. |
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Notes
Students should refer to the answer according to their question and preferred marks.
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