Microeconomics Vs Macroeconomics

Posted by
Jeff Black On Dec 13 , 2016

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Microeconomics

• The word ‘micro’ is derived from the Greek word ‘mikros’ which means ‘small.’

• It is the study of economics at an individual, group or company level.

• The central problem is price determination and allocation of resources.
• Price is the primary determinant of macroeconomic problems.

• It covers various issues like supply, demand, product pricing, consumption, production, economic welfare, etc.

• It takes a bottom-up approach to analyzing the economy

• Partial equilibrium method is used in microeconomics

• It deals with individual economic variables

• It consists of individual entities

• It solves the central problem of how, what and for whom to produce in the economy

Applications

Used to determine methods of improvement for individual business entities.

Careers

Economist, Researcher, Professor, financial advisor, and more.

Pros of Microeconomics

It depends on a free enterprise economy; i.e., the company is independent to take decisions.

Cons of Microeconomics

It only analyzes a small part of an economy while a bigger part is left untouched.

Macroeconomics

• The word ‘macro’ is derived from the Greek word ‘makros’ which means ‘large.’

• It is the study of a national economy as a whole

• Its central problem is the determination of the level of income and employment.

• Income is the primary determinant of Macroeconomic problems.

• It covers various issues like national income, distribution, employment, general price level, money, etc.

• It takes a top-down approach to analyze the economy

• General equilibrium method is used in macroeconomics

• It deals with aggregate economic variables

• The foundation of macroeconomics is microeconomics

• It solves the central problem of the full employment of resources in the economy.

Applications

Used to determine an economy’s overall health, the standard of living, and needs for improvement.

Careers

Economist, Professor, Researcher, Financial Advisor and more.

Pros of Macroeconomics

It is helpful in determining the BOP (balance of payments) along with the causes of deficit and surplus of it.

Cons of Macroeconomics

Its analysis states that the aggregates are homogeneous, but occasionally they are heterogeneous.

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