Difference between Micro and Macroeconomics

Main Difference

Both microeconomics and macroeconomics are two important branch of economic that looks at the economy in their own way. However, both deals in different sectors with different styles. The main difference between microeconomics and macroeconomics is that microeconomic is the study of individual consumers, households and firms in the economy. While macroeconomics has a broader view as it stands for the study of performance, behavior and structure of an economy as a whole instead of individual markets.

Microeconomics

The word ‘micro’ in microeconomics stands for small, so the word microeconomics stand for the study of behavior of individual consumers, firm or household and their impact on the economy individually. This applies to a market where goods and services are bought and sold. In fact, microeconomics deals in how the behavior of an individual consumer will affect the demand and supply of a goods and services in the market. The objective of microeconomics is to analyze market mechanism that establish relative prices among goods and services and allocation of limited resources among factors of production. The microeconomics in general deals in: demand, supply & equilibrium, measurement of elasticities, consumer demand theory, theory of production, costs of production, perfect competition, monopoly, oligopoly, market structure, game theory, labor economics, welfare economics, economics of information and likewise.

Macroeconomics

The word ‘macro’ in macroeconomics stands for large, so the word macroeconomics stand for the study of behavior of performance, structure, behavior of an economy as whole rather than individual. The indicators of macroeconomics are GDP, unemployment rates, and prices indexes. It explain the relationship between economic factors such as: national income, output, consumption, unemployment, savings, inflation, deflation, investment, interest rate, exchange rate, international trade, balance of trade, international finance, balance of payment and likewise. There are two areas of research in macroeconomics that are: it understands the causes and results of short-run fluctuations in national income and the determinants of long-run economic growth. It helps the government to forecasts the budget and development and evaluation of economic policy.

Key Differences

  • The word micro stands for small while the macroeconomics stand for large.
  • Microeconomics deals with the markets as a whole while macroeconomics deals with the economy in aggregate.
  • Microeconomics is the study of individual consumers, households and firms in the economy. While macroeconomics has a broader view as it stands for the study of performance, behavior and structure of an economy as a whole instead of individual markets.
  • The main factors of microeconomics are demand, supply & equilibrium, measurement of elasticities, consumer demand theory, theory of production, costs of production, perfect competition, monopoly, oligopoly, market structure, game theory, labor economics, welfare economics, economics of information and likewise.
  • The main factors of macroeconomics are GDP, unemployment rates, and prices indexes. It explain the relationship between economic factors such as: national income, output, consumption, unemployment, savings, inflation, deflation, investment, interest rate, exchange rate, international trade, balance of trade, international finance, balance of payment and likewise.

Video Explanation

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