Question

Distinguish between the following:

Microeconomics and Macroeconomics

Answer 1

Basis of Difference	Microeconomics	Macroeconomics
1. Definition	It is a branch of economics that studies economic variables at an individual level, like a household, firm, and consumer.	It is a branch of economics that studies economic variables of an economy as a whole.
2. Deals with	It deals with how consumers or producers make decisions depending on the budget given to them and other variables.	It deals with how different economic sectors (household, industrial, government, and foreign) make their decisions.
3. Approach  used	It is based on  partial equilibrium approach (i.e., equilibrium in one market)	It is based on general equilibrium approach (i.e., equilibrium in all markets simultaneously)
4. Variables involved	The major variables involved are price, consumer demand, wages, rent, profit, and the firm’s revenue and cost.	The major variables involved are aggregate demand, aggregate supply, inflation, unemployment, and poverty.