Question

Whats the difference between macro and micro economics?

Answer 1

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

1. Micro economics studies the problem of choice and scarcity at an individual level, a household, a firm or an industry.

Macro economics studies the problem of choice and scarcity at the level of economy as a whole.

2. Micro economics uses micro economic variables like consumer's demand and producer's supply whereas macro economics uses macro economic variables such as aggregate demand and aggregate supply.

3. Certain macro economic variables like general price level are assumes to be constant in micro economics.

Certain micro economic variables like distribution of GDP are assumes to be constant in macro economics.

4. The central issue in micro economics is the allocation of resources whereas in macro economics the central issue determination of the overall level of output.

5. The method of study in macro economics is known as general equilibrium analysis whereas the method of study in micro economics is known as the partial equilibrium analysis.