Difference Between Micro and Macro Economics
Everything in life requires a verified management procedure for the sake of its sustenance. As human beings, our sole purpose is not only to exist (liabilities); eat, sleep, and recreate ourselves, but to learn about ourselves, our environment, and apply what we have learned by functioning as assets to make us and our environment better.
When it comes to managing assets in general, one is sure to come across micro and macroeconomics, both of which are about the proper management of resources, but at different scales. They are literally called branches of economics. Think of them as the smallest and largest scale of economic studies.
To better understand this, let’s take a look at how these terms vary from one another. First of all, we’ll look at the definitions, the key differences, and some examples of these terms. Then, we’ll go ahead to answer the question – “what is micro and macroeconomics?” in a tabular form.
Definition of Micro Economics
Microeconomics is the study of the structure, decisions, behavior, and performance of a particular sector of an economy. This is rather a small-scale type of study that focuses mainly on a particular institution which can be an individual, a company, or an entity in a localized manner.
There are many other aspects, but the basis of this type of activity entails buying and selling of products and services. In this context, supply and demand play a huge role in the way things are managed at this level. A particular keyword that makes the difference between macro and microeconomics is “scarcity”.
This type of study helps a lot of people, especially producers, to determine what the consumers need and the best selling price for their manufactured products. It also determines how to allocate scarce resources efficiently during times of scarcity.
Some specialized areas of study in microeconomics include:
- The history of evolution and how it affects the economy
- Government tax
- How political institutions affect a policy
- Organization of health care systems
- How to apply economic principles under the law
Definition of Macro Economics
Macroeconomics is the study of the structure, decisions, behavior, and performance of an economy as a whole. This discipline is focused on achieving aims like maximizing income and economic growth at a national or international level. It covers everything that has to do with an economy as a whole.
The idea is to understand the actions and reactions that contribute to the current state of things in a financial system as a whole. To do that, the following basic questions must be answered:
- What is the difference between micro and macroeconomics as far as the system in question is concerned?
- What is the performance rate of the system?
- How is the organization structured?
- What does the decision-making process look like?
- How do the decision-making process, structure, and performance rate compare to other similar organization?
Distinctive answers to these questions make the difference between micro and macroeconomics. Note that the study process (and the type of questions asked) is peculiar to the macroeconomists handling the case. At the end of this process, the result should be an improvement in the daily lives of the participants.
Micro vs Macro Economics Comparison Table
|Basis of Comparison||Microeconomics||Macroeconomics|
|Definition||This is defined as the study of the structure, decisions, behavior, and performance of a particular sector of an economy||This is defined as the study of the structure, decisions, behavior, and performance of an economy as a whole|
|Main focus||Economic variables per unit||Economic variables per aggregate|
|Theory||Economic welfare, product pricing, and factor pricing||Aggregate consumption, national income, economic growth, and general price level|
|Benefits||Effective distribution of products and services at the right price, as it correlates with the factors of production||Effective planning and sustenance of economic stability and resolving issues like unemployment, inflation, deflation, etc.|
|Keywords||Supply, demand, scarcity||Inflation, deflation, unemployment rate, etc.|
|Examples of micro and macroeconomics||Study of a firm’s revenue, demand, and supply, cost of production, etc.||Analysis of aggregate demand and aggregate supply, interest rates, tax, subsidies, etc.|
Conclusion of the Main Difference Between Micro vs Macro Economics
Economics can be applied to almost any factor to understand how humans function as well as the willingness to distribute resources equitably on a small or large scale during times of scarcity or surplus. As an economist, you must always ask yourself, “What’s the difference between micro and macroeconomics as it relates to your subject of study?” The answer to this question will help you to find a balance that will ensure the subsistence and survival of resources for the benefit of the subjects.