macro vs micro economics.ppt

8/12/2019 Macro vs Micro Economics.ppt

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Micro vs macro economics

the term micro is derived from the greek wordmikros which means small thus micro

economics is the theory of small.

Micro economics is that branch of economicswhich studies an economic or decisionmaking unit and considers in detail the

behavior of that particular unit


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Features of micro economics

it deals with the analysis of the behavior and economicactions of small individuals units of the economy such

as particular consumers, particular firms or smallgroups of individuals units, including various industriesand markets


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Scope of micro economics

Wages theory Incomes, individuals, industries Equilibrium of innumerable units of economy.

Individuals households as consumers Individual firms as producers Behavior of individual firms in the fixation of price,

output, employment and their reactions to the changes in

the demand and supply conditions.


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Nature of micro economics

1. Micro economics may assume full employment2. problems studied under micro-economics relate to the

allocation of scarce resources of the economybetween the production of different goods andservices.

3. Determination of price of goods and factors ofproduction


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importance of micro-economics

Micro economic analysis is extremely useful and helpfulin the formulation of economic policies that will promoteeconomic welfare of the masses.

Micro economics solves the three central problems of

the economies. Q) what goods and services areproduced? Q) how goods and services are produced?Q) For whom to produce produced and distributed.

It promotes economic efficiency

Micro economies has application in various diversifiedfields of economic and commerce, such as agriculturaleconomies, labor economies, international economics,consumer economics.


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Relationship between micro & macro economics

Interdependence of micro and macro economics smallvariables constitute in the aggregate variables

Even macro-economic analysis require micro-economicanalysis to draw better decisions.

Micro-economy can not be added and will becomemacro or vice-versa, this is incorrect and misleading.


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Difference between micro & macroeconomics

Savings are good for the individuals it helps in accumulating wealth.But the country should invest productively otherwise depressionsand unemployment

An individual can buy more of a commodity but many individuals try

to buy more the price would shoot up. Individual may save and invest differently but aggregate totalsavings are equal to aggregate investment.

Micro-economy assumes full employment economy whereas macro-economics does not assume full employment.

macro vs micro economics.ppt

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