Micro and Macro Economics
Economics is a social science that deals with the study of production, distribution and consumption of goods. It studies how individuals, businesses, governments etc, work together to convert limited resources into goods and services to satisfy their wants and how they allocate resources between them to satisfy their wants and needs. Economics can be divided into two parts, e.g. micro economics and macro economics. Let us see how they differ from each other!
Microeconomics is the branch of economics that studies the behaviour and performance of the individual units like particular households, particular firms, particular industries, etc. In other words, it studies the behaviour of individuals, households, companies, industries etc. In this type of economy, the demand is the key factor in determining the quantity and price of a product in addition to the price and quantity of similar goods and services or substitute products, in order to make correct decision regarding the allocation of limited resources.
It gives emphasis on the issues that affect individuals and companies, e.g. the demand and supply of a particular product, the production capacity of an individual or business, and the effect of regulations on an industry or business. Thus, It focuses on individuals economic variables like price of a product, individual demand etc.
Macroeconomics is the branch of economics that studies the economies on a much larger scale like economy of a geographical area, a country, a continent or the whole world. It studies the major areas of economy like poverty, fiscal and monetary policy, employment or unemployment rate, imports and exports etc, as reflected by the changes in the Gross Domestic Product (GDP) and business cycles. It helps resolve various issues related to economy, thereby enables it function effectively. It focuses on aggregate economic variables like inflation, poverty, unemployment rate, export and import, national income etc.
Based on the above information, some of the key differences between microeconomics and macroeconomics are as follows: