ifferences between micro and macro

economics by Ray Mason

Micro economic is a branch of economics which focuses on the market attitude of the
individual customers and organizations which enables the business to understand the
market behavior in micro perspective. Micro economics enables the business
organizations to take decisions on the smaller and critical aspects; it also takes the factors
affecting such decisions into consideration. It was Adam Smith - the father of economics
who did an elaborative analysis on these concepts that is micro and macro economics.
Micro economics today is become an important branch of study in the field of economics
and business.

The following points will highlight the importance of micro economics:

It enables in establishing a method which can analyze individual economic forces¬

The market behavior of the consumers can be understood which is very much helpful in
decision making through micro economics¬

It also lead to understanding of the individual supply and demand determinants of the
market¬

Now let us take look at what macro economics means. Macro economics is that branch
of economics which studies the economics in a broader sense for example it deals with
national income of the country or the buying behavior of the Indians and foreign trade
position of India. Here the behavior of the economy is studied as a whole and as matter of
fact both macro and micro economics are very inter-dependent in nature and both
influence in decision making and strategy formulating of an organization.

Though they are interdependent they are still different from one another and the
following points will justify their differences:

Micro economics studies the individual behavior¬ that is it studies the consumption
behavior or attitude of a consumer whereas macro economics on the other hand studies
the overall market structure, that is enables the organization to understand the size and
capacity of the market.

The demand in micro economics directly¬ depends on the individual's expectations

where as in micro economics the demand depends on the organization's expectations.

In the¬ pricing method micro economics concerns with the price of a individual product
whereas in macro economics the overall production costs is considered

Taxation is another example which determines the¬ difference between these two fields
of economics. Micro economics deals with the individual's tax aspects where macro
economics deals with the overall tax aspects of the country.

Therefore by looking at the above differences between micro and macro economics we
can conclude that both these approaches towards the field of economics today occupy

Difference Between Micro & Macro Economics :

Micro Economics:-

• It deals with an individual's economic behavior.

• It deals with the pricing of a particular commodity in an industry.
• It deals with the income of a particular set of people.
• Study of micro economics is important for resource utilization, public finance,
and for taking business decisions.
• The concepts of micro-economics are independent concepts.
• The concepts were popularized by the famous Alfred Marshall.
• These concepts have more theoretical value.

Macro Economics:-

• It deals with aggregate economic behavior of the people in general.

• It deals with the general price level in the economy, National income accounting,
etc.
• Study of macro economics is important for formulation of economic policy of the
whole nation.
• The concept of macro economics are interdependent on one another.
• The concepts were popularized by the famous Lord J.M. Keynes.
• These concepts have more practical value.

Difference Between Micro & Macro Economics :

Micro Economics:

1. Micro Economics studies the problems of individual economic units such as a firm, an
industry, a consumer etc.

2. Micro Economic studies the problems of price determination, resource allocation etc.

3. While formulating economic theories, Micro Economics assumes that other things
remain constant.

4. The main determinant of Micro Economics is price.

Macro Economics:

1. Macro Economics studies economic problems relating to an economy viz., National

Income, Total Savings etc.

2. Macro Economics studies the problems of economic growth, employment and income
determination etc.

3. In Micro Economics economic variables are mutually inter-related independently.

4. In Micro Economics economic variables are mutually inter-related independently.