Microeconomics refers to the study of particular markets and segments of the economy. It looks such like consumer behavior, individual labor markets and the theory of the firms in other words it deals with individual units. While macro economics refers to the study of the whole economy at large instead of dealing with individual aspects. It looks such issues like aggregate variables, such as aggregate demand, national output and inflation.
Micro economics is concerned with:
- Supply and demand in individual markets
- Individual consumer behavior e.g. consumer choice theory
- Individual labor market e.g. demand for labor, wage determination
- Externalities arising from production and consumption e.g. externalities
- Product pricing
- Factor pricing
- Location of industries
Macro economics deals with:
- Monetary/fiscal e.g. what effect does interest rates have on whole economy
- Employment in an economy
- Economic growth in an economy
- Globalization and international trade
- Government borrowing
- Reasons for difference of standards of living and economic growth between countries.
Differences Between Micro Economics and Macro Economics
Micro economics concerned with single economic variables such as demand, price and consumer where as macro economics is the study of aggregates of economy, such as national income, aggregate savings of all individuals in the country and aggregate output of everyone in the country this clearly shows how micro economics deals with individual behavior while the macro economics deals with the whole economy instead of individual aspects.
With consideration of the scope micro economics is narrow due to the fact that it deals with economic problems at the individual level for example how the price of the commodity will affect the quantity demanded and supplied of particular commodity while macro economics is wide as far as scope is concerned because it deals with the problems of the whole economy such as unemployment, monetary fiscal policies and international trade.
Micro economics helps in solving central problems like determination of price and allocation of resources while macro economics helps in determination of income in the country and employment rates in the country as far as solving central problems are concerned.
Also micro economics and macro economics are differ from its important for example micro economics it ascertains price of product and other factors of production in the economy whereas macro economics it maintains stability in the general price level and is helpful in solving various problems of economy such as inflation, deflation, inflation and unemployment rate in an economy.
Micro economics deals with individual units and it affects individual decisions regarding the allocation of scarce resources whereas macro economics it deals with aggregate or large scale units i.e. the structure, behavior and decision making in an economy as whole.
Micro economics it is applied to operational or internal issues for example determination of allocation of industries whereas macro economics it deals with external issues for example international trade.
Micro economics determine the individual performance in the economy while macro economics determine the level of economic activities in the whole society.