MICRO ECONOMICS V/S MACRO ECONOMICS
Meaning
Micro economics deals with the economic behaviour of various economic units in the economy, such as particular firms, particular households, prices of individual products, wages in particular industry, etc.
Macro economics is concerned with the economic behaviour of aggregates in the economy, such as general price level, total production output, national income, etc.
Allocation of resources
Micro economics is concerned with the allocation of resources for the production of particular goods.
Macroeconomics deals with allocation of resources in the economy as a whole.
Approach
Micro economics analysis is based on partial equilibrium analysis. It considers other things constant.
Macroeconomics analysis is based on General equilibrium analysis. In Macroeconomics, everything depends on every things else.
Issue of Aggregation
Microeconomics deals with aggregates of a particular industry (such as cement industry or textile industry) with regard to output, demand, price, employment, etc., by taking into consideration the aggregation of various firms belonging to that industry.
Macroeconomics is concerned with aggregation that relates to the whole economy and not of a particular industry. For instance, Macroeconomics analysis can be done in respect of total employment by considering the aggregation of all the sectors of the economy.
Economic Variables
Microeconomics deals with the behaviour of micro variables such as individual demand, wages in a particular industry, prices of a particular products, etc.
Macroeconomics is concerned with the behaviour of macro variables such a general price level, employment in the country, national income total savings and investments.
Method of Study
Microeconomics studies each unit in detail by using slicing method.
Macroeconomics studies the economy as a whole by using lumping method.
