DIFFERENCE BETWEEN MACRO

AND MICRO ECONOMICS

Maddali Laxmi Swetha, MBA (hr)
http://maddaliswetha.blogspot.com/
 THE TERM ECONOMICS DEFINE AS
 The word 'economics' comes from two Greek words,
'eco' meaning home and 'nomos' meaning accounts.

 Economics is that branch of knowledge which

studies the processes through which the resource
which are scarce in nature are allocated to satisfy
the unlimited wants of the people.

 In other words, the economics of the individual

agent's decisions about resources is referred to as
microeconomics, while macroeconomics studies the
interactions in the economy as a whole.
WHAT IS MICRO AND MACRO ECONOMICS?

 MicroEconomics talks about the actions of

an individual unit, i.e. an individual, firm,
household, market, industry, etc.

 Macro Economics studies the economy as a

whole, i.e. it assesses not a single unit but
the combination of all i.e. firms, households,
nation, industries, market, etc.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS
 Meaning:

 Microeconomics is the branch of economics that

studies the behavior of an individual consumer,
firm, family is known as Microeconomics.

 Macroeconomics is the branch of economics that

studies the behavior of the whole economy, (both
national and international) is known as
Macroeconomics.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS
 Microeconomics deals with individual economic
variables.
 Macroeconomics deals with Aggregate economic
variables.

 Business Application:
 Microeconomics is applied to operational or internal
issue.
 Macroeconomics environment and external issues.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS
 Tools:
 Microeconomics is the demand and supply. And
Macroeconomics is the Aggregate Demand and
Aggregate Supply.

 Assumption of Microeconomics:
 It assumes that all macro-economic variables are
constant.
 Assumption of Macroeconomics:

 It assumes that all micro-economic variables are

constant.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS

 Microeconomics: Theory of Product Pricing, Theory

of Factor Pricing, Theory of Economic Welfare.

 Macroeconomics: Theory of National Income,

Aggregate Consumption, Theory of General Price
Level, Economic Growth.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS
 Scope:

 Microeconomics it covers various issues like

demand, supply, product pricing, factor pricing,
production, consumption, economic welfare, etc.

 Macroeconomics it covers various issues like,

national income, general price level, distribution,
employment, money etc.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS
 Importance of Microeconomics: It is helpful in
determining the prices of a product along with the
prices of factors of production (land, labor, capital,
entrepreneur etc.) within the economy.

 Importance of Macroeconomics: It maintains

stability in the general price level and resolves the
major problems of the economy like inflation,
deflation, reflation, unemployment and poverty as a
whole.
 DIFFERENCE BETWEEN
MICRO AND MACRO ECONOMICS

 Limitations of Microeconomics: It is based on

unrealistic assumptions, i.e. In microeconomics it is
assumed that there is a full employment in the
society which is not at all possible.

 Limitations of Macroeconomics: It has been

analyzed that 'Fallacy of Composition' involves,
which sometimes doesn't proves true because it is
possible that what is true for aggregate may not be
true for individuals too.
 CONCLUSION OF
MICRO AND MACRO ECONOMICS

Every coin has two aspects:

 micro and macroeconomics are the two aspects of

the same coin, also they cover the whole economy of
a country.

 Remember, this a important point that which

makes them different is the area of application.
 THANK YOU
 Paper presentation made by Maddali Laxmi
Swetha.

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