Distinguish between microeconomics and macroeconomics. Give examples
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BASIS FOR COMPARISON MICROECONOMICS MACROECONOMICS
Meaning The branch of economics that studies the behavior of an individual consumer, firm, family is known as Microeconomics. The branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics.
Deals with Individual economic variables Aggregate economic variables
Business Application Applied to operational or internal issues Environment and external issues
Scope Covers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc. Covers various issues like, national income, general price level, distribution, employment, money etc.
Importance Helpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) within the economy. Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment and poverty as a whole.
Limitations It is based on unrealistic assumptions, i.e. In microeconomics it is assumed that there is a full employment in the society which is not at all possible. It has been analyzed that 'Fallacy of Composition' involves, which sometimes doesn't proves true because it is possible that what is true for aggregate may not be true for individuals too.
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Here is your answer
Comparison Chart
BASIS FOR COMPARISON MICROECONOMICS MACROECONOMICS
Meaning The branch of economics that studies the behavior of an individual consumer, firm, family is known as Microeconomics. The branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics.
Deals with Individual economic variables Aggregate economic variables
Business Application Applied to operational or internal issues Environment and external issues
Scope Covers various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc. Covers various issues like, national income, general price level, distribution, employment, money etc.
Importance Helpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) within the economy. Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment and poverty as a whole.
Limitations It is based on unrealistic assumptions, i.e. In microeconomics it is assumed that there is a full employment in the society which is not at all possible. It has been analyzed that 'Fallacy of Composition' involves, which sometimes doesn't proves true because it is possible that what is true for aggregate may not be true for individuals too.
Hope it helps
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