What is the difference between microeconomics and macroeconomics?
What is the difference between microeconomics and macroeconomics?
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| Basis | Microeconomics | Macroeconomics |
| Meaning | Microeconomics is that part of economic theory which studies the behaviour of individual units of an economy. | Macroeconomics is that part of economic theory which studies the behaviour of aggregates of the economy as a whole. |
| Tools | Demand and Supply | Aggregate Demand & Aggregate Supply |
| Basic Objective | It aims to determine price of a commodity or factors of production. | it aims to determine income and employment level of the economy. |
| Degree of aggregation | It involves limited degree of aggregation. For example, market demand is derived by aggregating individual demands of all buyers in the particular market. | It involves the highest degree of aggregation. For example, aggregate demand is derived for the entire economy. |
| Basic Assumptions | It assumes all the macro variables to be constant, i.e., it assumes that national income, consumption, savings, etc. are constant. | It assumes that all the micro variables, like decisions of households and firms, prices of individual products, etc, are constant. |
| Other Name | Microeconomics is also known as ‘Price Theory’ as it is primarily concerned with determination of prices of commodities and factors of production. | Macroeconomics is also known as ‘Income and Employment Theory’ as it is primarily concerned with determination of level of income and employment. |
| Examples | Individual income, individual output. | National Income, National output. |
Anurag Pathak Changed status to publish
