Microeconomics deals with the economic problems at an individual level whereas macroeconomics deals with the economic problems at the level of the economy as a whole.
Microeconomics and macroeconomics are the two branches of economics. To understand them in detail, let’s take an example of a recent case related to pandemic Coronavirus.
Currently, the whole world is united to fight against this deadly virus. Every country, every individual are taking every possible step to safeguard themselves from this pandemic. The localities are being sanitized by the government authorities. Doctors are working day and night to get the patients well.
Thanks to our Honourable Prime Minister Shri Narendra Modi, who is working day and night to ensure that 100% sanitation and health facilities be made available to all the residents in India. It represents the macroeconomic aspect.
But you may have also seen in the newspapers that when the country wide lockdown was announced by our Prime Minister, many factory owners had asked their workers to leave the factories just because the factory will not operate for the next 21 days and keeping these workers on work will result in an unnecessary loss for their organisation. It means their decision was for their own benefit rather than for society. It is representing microeconomic aspect.
In the above example, we have seen that when we are taking decisions at an individual level, we are not concerned with what is happening at the country level and at the same time, when the decisions are taken at the country level, it is not affected by what I think. It means both the branches assumes each other factors constant.
In a nutshell, when we talk about the various economic problems at the level of a country, then it is termed as macroeconomics. But when it comes at an individual level means individual household, firm or factory, then it is termed as microeconomics.
Economic issues studied in these branches
- Demand theory – Deals with consumer equilibrium
- Production theory – Deals with producer equilibrium
- Price determination – Deals with market equilibrium
- Factor pricing (or distribution).
- National Income
- General price level
- Total Employment
|Branch of Economics||Words to focus||Derived from Greek words||Meaning||Deals with|
|Microeconomics||Micro||Mikros||Small||Economic activities of an individual unit.|
|Macroeconomics||Macro||Makros||Large||Economic activities related to an economy as a whole.|