| Basis | Micro Economics | Macro Economics |
|---|---|---|
| Meaning | Micro economics is a branch of economics that studies the behavior of an individual. Here an individual can be a firm, family, or an economy. | Macro Economics is made up of different micro variables. Here the focus is not on studying the behavior of an individual. But a country as a whole. |
| Deals With | Micro Economics deals with individual economic variables. | Macro Economics deals with an aggregate of multiple economic variables. |
| Application | This is applied to studying and solving internal issues. | Can be applied to study external or environmental issues. |
| Tools | Demand and supply | The aggregate of demand and supply for multiple variables. |
| Important | Micro economics is very important for determining the prices of the products within an economy. | Helps in solving issues like instability of prices |
| Limitations | The assumptions of micro economics are unrealistic. | Sometimes macroeconomics fails. Because what is true for an aggregate may not be true for every individual in an economy. |
What is Microeconomics?
Microeconomics is a branch of economics that studies the behavior of the individual variables of an economy. This can be an individual.
If you want to study the economic behavior of a family then you can go with microeconomics.
For example, Studying the incomes of families in Karnataka.
What is Macroeconomics?
Macroeconomics is a branch of economics that studies the behavior of the whole economy of a country. It can be the population of a single country. Or the population of all the countries in the world.
Basically, macroeconomics is about studying multiple variables of microeconomics together. And then drawing the conclusions and finding the solutions.
For example, Studying the income levels of families in all the states of India.
There is a very thin line between these two. I will try to explain this thin line with an example.
If you want to study the income of the families in all the states of India. Then we can consider this as a microeconomic study.
But at the same time if you want to study the income of families in whole India. Then it becomes Macroeconomics.
This is how things work.
The thing that was once microeconomics turns into macro when the case changes.
Concepts of Microeconomics
These are some of the concepts of microeconomics.
- Marginal utility of demand.
- Diminishing returns and supply.
- The elasticity of demand.
- The elasticity of supply.
- Role of prices and profits in determining resource allocation.
Concepts of Macroeconomics
These are some of the concepts of microeconomics.
- Monetary Policy.
- Input, output.
- Unemployment.
- Inflation and Deflation.
Video About Macroeconomics
Video About Macroeconomics
Conclusion
These are the major differences between micro and macroeconomics that you should know. The videos inserted above are not created by Online Indias. The video credit goes to the YouTube channel by the name of Jacob Clifford.