Question

Distinguish between the following.

Micro Economics and Macro Economics.

Answer 1

Points	Micro Economics	Macro Economics
1. Meaning	Micro economics deals with the economic behaviour of various economic units in the economy, such as particular firms, particular households, prices of individual products, wages in particular industry, etc.	Macro economics is concerned with the economic behaviour of aggregates in the economy, such as general price level, total production output, national income, etc.
2. Allocation of resources	Micro economics is concerned with the allocation of resources for the production of particular goods.	Macro economics deals with the allocation of resources in the economy as a whole.
3. Approach	Micro economics analysis is based on partial equilibrium analysis. It considers other things constant.	Macro economics analysis is based on general equilibrium analysis. In macro economics, everything depends on everything else.
4. Issue of Aggregation	Micro economics deals with aggregates of a particular industry (such as the cement industry or textile industry) with regard to output, demand, price, employment, etc., by taking into consideration the aggregation of various firms belonging to that industry.	Macro economics is concerned with aggregation that relates to the whole economy and not of a particular industry. For instance, Macro economics analysis can be done in respect of total employment by considering the aggregation of all the sectors of the economy.
5. Economic variables	Micro economics deals with the behaviour of micro variables such as individual demand, wages in a particular industry, prices of a particular products, etc.	Macro economics is concerned with the behaviour of macro variables such as a general price level, employment in the country, national income, total savings and investments.
6. Method of Study	Micro economics studies each unit in detail by using slicing method.	Macro economics studies the economy as a whole by using lumping method.