Mlcroeconomlcs deals wlLh Lhe funcLlonlng of lndlvldual lndusLrles and Lhe behavlor

of lndlvldual economlc declslon marklng unlLs flrms and households llrms' cholces
abouL whaL Lo produce and how much Lo charge and households' cholces abouL
whaL and how much Lo buy help Lo explaln why Lhe economy produces Lhe goods
and servlces lL does

AnoLher blg quesLlon addressed by mlcroeconomlcs ls who geLs Lhe goods and
servlces LhaL are produced WealLhy households geL more LhaL poor households and
Lhe forces LhaL deLermlne Lhls dlsLrlbuLlon of ouLpuL are Lhe provlnce of
mlcroeconomlcs Why does poverLy exlsL? Who ls poor? Why do some [obs pay more
Lhan oLhers?

1hlnklng agaln abouL whaL you consume ln a day And Lhen Lhlnk back Lo LhaL vlew
over a blg clLy Somebody declded Lo bulld Lhose facLorles Somebody declded Lo
consLrucL Lhe roads 8ulld Lhe houslng produce Lhe cars and smoke Lhe bacon Why?
WhaL ls golng on ln all Lhose bulldlngs? lL ls easy Lo see Lhe undersLandlng lndlvldual
mlrcodeclslons ls very lmporLanL Lo any undersLandlng of socleLy

Macroeconomlcs looks aL Lhe economy as a whole lnsLead of Lrylng Lo undersLand
whaL deLermlnes Lhe ouLpuL a slngle flrms or lndusLry or whaL Lhe consumpLlon
paLLerns are of a slngle household or group of households macroeconomlcs
examlnes Lhe facLors LhaL deLermlne naLlonal ouLpuL or naLlonal ouLpuL
Mlcroeconomlcs ls concerned wlLh household lncome macroeconomlcs deals wlLh
naLlonal lncome

Whereas mlcroeconomlcs focuses on lndlvldual producL prlces and relaLlve prlces
macroeconomlcs looks aLe Lhe overall prlce level and how qulckly or slowly lL ls rlslng
or falllng Mlcroeconomlcs quesLlons how many people wlll be hlred or flred Lhls
year ln a parLlcular lndusLry or ln a cerLaln geographlc area and focuses on Lhe facLors
LhaL deLermlne how much labor a flrm or an lndusLry wlll hlre Macroeconomlcs
deals wlLh aggregaLe employmenL and unemploymenL how many [obs exlsL ln Lhe
economy as a whole and how many people who are wllllng Lo work are noL able Lo
flnd work

Mlcroeconomlcs looks aL Lhe lndlvldual unlL Lhe household Lhe flrm Lhe lndusLry lL
sees and examlnes Lhe Lrees Macroeconomlcs looks aL Lhe whole Lhe aggregaLe lL
sees and analyzes Lhe foresL


dlvlslon producLlon rlces lncome employmenL

mlcroeconomlcs roducLlon/ouLpuL
ln lndlvldual
lndusLrles and
buslnesses
how many car
rlce of
lndlvldual

lood prlces
ulsLrlbuLlon of
lncome and
wealLh
Mlnlmum wage
LmploymenL by
lndlvldual
buslnesses
number of
employees ln a
flrm
macroeconomlcs naLlonal
producLlon/ouLpuL
LoLal lndusLrlal
ouLpuL
AggregaLe prlce
level

Consumer
prlces
naLlonal
lncome
1oLal wages and
salarles
LmploymenL
and
unemploymenL
ln Lhe economy
1oLal number of
[obs



Lxplaln brlefly how macroeconomlcs ls dlfferenL from mlcroeconomlcs Pow can
macroeconomlsLs use mlcroeconomlc Lheory Lo gulde Lhem ln Lhelr work and why
mlghL Lhey wlsh Lo do so? lease glve example