MICROECONOMICS AND

MACROECONOMICS
DONE BY: Anam Umme Ammarah
Class: R21 BBA
Roll no.: 29
MICROECONOMICS:
DEFINITION:
Microeconomics is the study of what is likely to happen
(tendencies) when individuals make choices in response to
changes in incentives, prices, resources, and/or methods of
production. Individual actors are often grouped into
microeconomic subgroups, such as buyers, sellers, and business
owners. These groups create the supply and demand for
resources, using money and interest rates as a pricing mechanism
for coordination.
USES:
Microeconomics can be applied in a positive or normative sense.
Positive microeconomics describes economic behavior and
explains what to expect if certain conditions change. If a
manufacturer raises the prices of cars, positive microeconomics
says consumers will tend to buy fewer than before. If a major
copper mine collapses in South America, the price of copper will
tend to increase, because supply is restricted. Positive
microeconomics could help an investor see why Apple Inc. stock
prices might fall if consumers buy fewer iPhones.
Microeconomics could also explain why a higher minimum wage
might force Wendy's Company to hire fewer workers.
 These explanations, conclusions, and predictions of positive
microeconomics can then also be applied normatively to prescribe
what people, businesses, and governments should do in order to
the most valuable or beneficial patterns of production, exchange,
and consumption among market participants. This extension of
the implications of microeconomics from what is to what ought to
be or what people ought to do also requires at least the implicit
application of some sort of ethical or moral theory or principles,
which usually means some form of utilitarianism.

EXAMPLES:
​ How a local business decides to allocate their funds
​ How a city decides to spend a government surplus
​ The housing market of a particular city/neighborhood
​ Production of a local business
​ In general, microeconomics is concerned with decision-making
that has low-level effects, that is, a city, whereas microeconomics
has high-level, large-scale effects, that affect nations.
MACROECONOMICS:
DEFINITION:
Macroeconomics (from the Greek prefix makro- meaning "large"
+ economics) is a branch of economics dealing with the
performance, structure, behavior, and decision-making of an
economy as a whole. For example, using interest rates, taxes, and
government spending to regulate an economy’s growth and
stability. This includes regional, national, and global economies.
According to a 2018 assessment by economists Emi Nakamura
and Jón Steinsson, economic "evidence regarding the
consequences of different macroeconomic policies is still highly
imperfect and open to serious criticism.

USES:
Macroeconomics helps to understand the causes, effects, and
remedies of general unemployment in the economy. It also
studies the major causes of unemployment in the economy and
thereby increases/decreases in total consumption, production, and
income.
 EXAMPLES:
​ Market Failure: Market inefficiencies and failures such as the
destruction of common goods due to economic systems that
provide no incentive for their preservation.
​ Competition: It represents Conditions for competitive markets
such as the impact of monopolies or cronyism on a national
economy.
​ Growth: The causes of economic growth or contraction such as
economic policy, investment, demographics, technological
change, and infrastructure.
​ Business Cycles: Cycles of expansion and retraction in an
economy.
​ Productivity and productivity: it means Improvements in
productivity rates driven by technological change and economic
development. and the efficiency of the factors of production such
as capital and land.
​ Employment: Modeling the causes of unemployment such as the
structural change to an economy.
​ Price Stability: The causes and impact of inflation and
deflation.
​ Goods: They are different types of goods and their supply and
demand in a variety of market conditions. For example, the
effect of a global shift toward a service-based economy.