Differences between Micro and Macro Economics

The following are the differences between Micro and Macro Economics.

1.      Scope:  Micro –Economics is concerned with study of Individual economic units such as a firm, a consumer etc.

Macro –Economics deals with large segments of the economy such as aggregate demand, general price level, national income etc.

2.      Method of study:  Micro- Economics studies the individual parts of the economy intensively (slicing Method).  Ex. Behaviour of a consumer.

Macro-Economics lumps up the individual units together into big lumps for the purpose of brief study.  Ex.  The study of national income.

3.     Different economic agents:  In micro-economics, each individual economic agent thinks about its own interest and welfare.  For example, Producers try to get maximum profit at minimum cost of production with the higher selling prices.

In Macro – economics, economic agents are different from the individual economic agents and their aim is to get maximum welfare of the country.  For example, the Government of India, one of the macro -economic decision maker in India has a goal to achieve economic welfare of India.

4.      Equilibrium Analysis:  Micro-Economics studies the partial equilibrium in the economy, such as consumer equilibrium, producer equilibrium etc.

Macro – economics studies the general equilibrium in the economy, such as equilibrium in the general price level etc.

5.     Domain:  Micro-economics comprises the theories such as theory of consumer’s behavior, the theory of production and cost, the theory of rent, wages, interest and Profits.

Macro-economics includes the theories like the theory of income, output and employment, consumption function, inflation etc.

6.     View:  Micro economics explains the different economic variables at micro level.  It is a detailed study giving Microscopic view.

Macro economics is a brief study of an economy as a whole.  So its study is defined as Birds eye view.

     In spite of various differences, both Micro and Macro economics are interdependent and complementary to each other.