The term ‘Micro’ has been derived from the greek word ‘mikros’ which means ‘small’. Inmicro-economic approach, attention is concentrated on a very small part or the individual units.Hanson terms it as “atomistic individualistic approach.”Boulding has described micro-economics as the study of “The particular firms, particular households, individual prices, wages, incomes, individual industries and particular commodities.”Thus micro economics is the study of the behavior of individual consumer’s, individualfirm or workers. It studies, for example the motive of a business man in diverting his capital fromthe cotton textile industry to the Weller industry or that of an individual producer for increasing the production of commodity A rather than commodity B.
Scope of Micro Economics:
Micro-economic analysis explains the allocation of resources assuming that the totalresources are given. The following chart given of the view of the scope of micro-economics.
Macro-Economics: Definitions and Scope
The term ‘Macro’ has also been derived from another Greek word ‘Makros’ meaning large.The word itself was coined in 1933 by Ragnar Frisch.Macro-economics implies a study of economic aggregates or the wholes. The problems likefull employment, unemployment, economic stability and economic growth cannot be accuratelyinvestigated through the examination of infinitesimally small units like individual consumers, producers, workers or firms. The actions of a single employer cannot in any way, have a perceptible impact upon the employment situation of a country. The production or investment by asingle firm is unlike to generate cyclical fluctuations. The proper analysis of such problem requiresan aggregated thinking. Full employment, economic growth and instability are concerned with theentire economic system. Their analysis and solution in the right perspective can be possible only if a macro approach and aggregative instruments of analysis and policy are employed.
Theory of CommodityPricingTheoryFactor PricingWelfare EconomicsTheory of DemandTheory of SupplyRentWagesInterestProfit