difference between micro economics and macro economics
Answers
Answer:
Microeconomics
Macroeconomics
Meaning
Microeconomics is the branch of Economics that is related to the study of individual, household and firm’s behaviour in decision making and allocation of the resources. It comprises markets of goods and services and deals with economic issues.Macroeconomics is the branch of Economics that deals with the study of the behaviour and performance of the economy in total. The most important factors studied in macroeconomics involve gross domestic product (GDP), unemployment, inflation and growth rate etc.
Area of study
Microeconomics studies the particular market segment of the economyMacroeconomics studies the whole economy, that covers several market segments
Deals with
Microeconomics deals with various issues like demand, supply, factor pricing, product pricing, economic welfare, production, consumption, and more.
Macroeconomics deals with various issues like national income, distribution, employment, general price level, money, and more.
Business Application
It is applied to internal issues.
It is applied to environmental and external issues.
Scope
It covers several issues like demand, supply, factor pricing, product pricing, economic welfare, production, consumption, and more.It covers several issues like distribution, national income, employment, money, general price level, and more.
Significance
It is useful in regulating the prices of a product alongside the prices of factors of production (labour, land, entrepreneur, capital, and more) within the economy.
It perpetuates firmness in the broad price level, and solves the major issues of the economy like deflation, inflation, rising prices (reflation), unemployment, and poverty as a whole.
Limitations
It is based on impractical presuppositions, i.e., in microeconomics, it is presumed that there is full employment in the community, which is not at all feasible.
It has been scrutinised that the misconception of composition’ incorporates, which sometimes fails to prove accurate because it is feasible that what is true for aggregate (comprehensive) may not be true for individuals as well.