what is the difference between micro and macro economics? answer in 6 marks question
Answers
The main difference between microeconomics and macroeconomics is scale. Microeconomics studies the behavior of individual households and firms in making decisions on the allocation of limited resources. Macroeconomics is the study of economies on the national, regional or global scale.
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Explanation:
Economic is a study about how individuals, businesses, and governments make choices on allocating resources to satisfy their needs. These groups determine how the resources are organized and coordinated to achieve maximum output. And they are mostly concerned with the production, distribution, and consumption of goods and services.
Economics is divided into two important sections, they are: macroeconomics & microeconomics
⇨ macroeconomics deals with the behaviour of the aggregate economy and
microeconomics focuses on individual consumers and businesses.
What is Microeconomics?
Microeconomics is the study of decisions made by people and businesses regarding the allocation of resources and prices of goods and services. The government decides the regulation for taxes. Microeconomics focuses on the supply, that determines the price level of the economy. It uses the bottom-up approach strategy to analyze the economy. In other words, microeconomics tries to understand human choices and resource allocation. Microeconomics does not decide what are the changes taking place in the market, instead, it explains why there are changes happening in the market.
The main key role of microeconomics is to examine how a company could maximize its production and capacity so that it could lower prices and better compete in its industry. A lot of microeconomic information can be gleaned from the financial statements.
the important key factors of microeconomics are :
Demand, Supply, and Equilibrium
Production Theory
Costs of Production
Labor Economics
Examples: Individual Demand, Price of a product.
What is Macroeconomics?
Macroeconomics is a branch of economics that depicts a substantial picture. It scrutinizes itself with the economy at a massive scale, several issues of an economy are considered. The issues confronted by an economy and the headway that it makes are measured and apprehended as a part and parcel of Macroeconomics.
Macroeconomics studies the association between various countries regarding how the policies of one nation have an upshot on the other. It circumscribes within its scope, analysing the success and failure of government strategies.
In macroeconomics we normally clarify the survey of how the nation’s total manufacture and the degree of employment are associated with features (called ‘variables’) like :
Cost prices
Wage rates
Rate of interest
Profits etc.,
by concentrating on a single imaginary good and what happens to it.
The important concepts covered under microeconomics are :
A Capitalist Nation
Investment expenditure
Revenue
Examples: Aggregate Demand, National Income.