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Distinction Between Microeconomics and Macroeconomics

Author:

Neha is a Post Graduate from Delhi University in Commerce. Loves to write a verity subjects.

Microeconomics and Macroeconomics are inter-dependent and complementary.

When we study the individual sugar mill manufacturing sugar, our study is microanalysis but if we study the entire sugar manufacturing sector of the economy, our study is macroanalysis.

When we study the individual sugar mill manufacturing sugar, our study is microanalysis but if we study the entire sugar manufacturing sector of the economy, our study is macroanalysis.

Distinction between microeconomics and Macroeconomics

Microeconomics is the study of individual economic units of an economy, whereas macroeconomics is the study of aggregates of an economy as a whole. For example, when we study the individual sugar mill manufacturing sugar, our study is microanalysis but if we study the entire sugar manufacturing sector of the economy, our study is macroanalysis.

Also please note if we study the problem of production of a firm, our analysis is micro-study but if we study the problems of production of the whole economy, our analysis is macro-study. Both Microeconomics and Macroeconomics are inter-dependent and complementary.

The main difference between the Microeconomics and Macroeconomics are as follows:

MicroeconomicsMacroeconomics

1. It is the study of individual economic units of an economy.

It is the study of the economy as a whole and its aggregates.

2. It deals with individual income, individual prices, and individual output, etc.

It deals with aggregates like national income, general price level, and national output, etc.

3. Its Central problem is price determination and allocation of resources.

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

4. Its main tools are the demand and supply of a particular commodity/factor.

Its main tools are aggregate demand and aggregate supply of the economy as a whole.

5. It helps to solve the central problem of what, how, and for whom to produce in the economy.

It helps to solve the central problem of the full employment of resources in the economy.

6. It discusses how the equilibrium of a consumer, a producer, or an industry is attained.

It is concerned with the determination of the equilibrium level of income and employment of the economy.

7. Price is the main determinant of microeconomic problems.

Income is the major determinant of macroeconomic problems.

8. Examples are individual income, individual savings, price determination of a commodity, an individual firm's output, the consumer's equilibrium, etc.

Examples are national income, national savings, general price level, aggregate demand, aggregate supply, poverty, unemployment, etc.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2012 Neha J

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Neha J (author) from Delhi on April 29, 2012:

Thanks MBYL for your visit and comment.

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