Question

Whats the difference between macro and micro economics?

Answer 1

The following points highlight the differences between micro economics and macro economics:

1. Micro economics deals with economic issues related to small economic units like individual consumer, individual producer, an individual firm, an individual industry and an individual market.

Macro economics deals with economic issues related to the economy as a whole.

2. Micro economics is concerned with the determination of price in the market whereas macro economics is concerned with determination of aggregate output and general price level in the economy as a whole.

3. Micro economics assumes that macro economic variables like general price level are constant whereas macro economics assumes that micro economic variables like distribution of GDP remains constant.

4. Principal components of micro economics are theory of consumer behaviour, theory of producer behaviour and theory of price.

Principal components of macro economics are theory related to equilibrium, theory related to disequilibrium and theory related to correction of disequilibrium.