Microeconomics Vs. Macroeconomics

In a broad sense, microeconomics and macroeconomics are basically the subcategories of economics. Even though they are different from each other in several circumstances, they do depend on each other in terms of a few aspects. Nevertheless, there are more differences, than similarities, between the two concepts, and these differences are highlighted in the name itself. While microeconomics has the focus on the smaller entities (the consumer and the producer), macroeconomics focuses on the larger entity (the economy).

Microeconomics

In economics, microeconomics is the branch that deals with the functionality and behavior of individual entities, such as business firms and households. The effect of the functioning and behavior of these individual units on the supply and demand for goods and services is also taken into consideration in this subcategory of economics. Typical questions asked in this case include:

• How does a consumer take decisions on the consumption of goods and services?
• How do firms price their goods and services?

It also takes into consideration the decision-making power of these individual units. It is an important tool of the economy as it studies the economic factors, such as the consumer behavior, and gives a clear picture of the economy.

Macroeconomics

Macroeconomics, on the other hand, is the branch that deals with the functionality and behavior of the entire economy of the nation or the world. This includes concepts like national income, price level, employment, interest rates, etc. Typical questions asked in this case include:

• What are Causes of Inflation?
• What are the effects of national debt on the economic growth of the nation?

Yet another important aspect that macroeconomics takes into consideration is the influence of the government economic policies on all the aggregates mentioned above. Though it looks at the economy in a broader perspective, it does help in studying the conditions of the economy, and facilitates analysis of the same.

Microeconomics versus Macroeconomics

As we said earlier, there are quite a few differences between these two concepts. While microeconomics stresses on the individual firms and consumer, macroeconomics deals with the whole economy as a single unit. This invariably means that the former takes into consideration the demand and supply of the individual goods and services, while the later takes into consideration the aggregate of demand and supply of all goods and services.

Yet another point of distinction in this comparison is the point of equilibrium. In microeconomics, the equilibrium occurs when the quantity demanded equals the quantity supplied. In macroeconomics, on the other hand, equilibrium occurs when the aggregate demand equals aggregate supply. To sum it up, microeconomics focuses on the various factors of supply and demand, and the repercussions of these factors on the price of commodities, while macroeconomics focuses on the increase in the economic growth, and the changes in the national income.

Though there exist quite a few differences between the two, they are dependent on each other to some extent. An increase in the inflation, (macroeconomics) result in an increase of the price of raw material, which, in turn, results in an increase in the price of end product (microeconomics). In the end, both are important for sustaining the growth of the economy, whilst maintaining the necessary standard.