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Unit-1: Introduction to Microeconomics

1.3 Distinction between Microeconomics and Macroeconomics Notes

Following are the differences between Microeconomics and Macroeconomics:
‘Micro’ word came from Greek word ‘micros’ which means small. Microeconomics deals with humans
and a small group of humans. It is the study of exclusive family, firms, companies, things and prices.
‘Macro’ word is also from Greek word ‘macros’ which means ‘Big’. It deals in a big manner like with
nation’s capital and not with a person’s income, normal price range and not with an individual price,
national productivity and not with an individual productivity.

‘Micro’ word is derived from the word ‘Micros’ and ‘Macro’ word is derived from
the Greek word ‘Macros’.

Microeconomics maximizes the use of demand and maximizes the profit over minimum input of supply.
On the other hand, the main motto of macroeconomics is purposeful employment, fixed pricing, rise on
economical condition and favorable payment balance.
The base of microeconomics is pricing which works with the help of supply and demand. This power
helps to equalize the pricing in market. On the other hand, the base of macroeconomics is national
income, productivity, employment and general pricing which defines by total demand and total
supply.
Microeconomics is based on prudent behaviour of humans. “All things are equal” used in it to define
various economical laws. On the other hand, the recognition of macroeconomics deals with the total
volume of economical condition and its range, graph of national income and normal life.

Self Assessment

Multiple choice questions:
4. The efficiency of distribution of factors is related to the study of .................. economics.
(a) welfare (b) micro (c) macro (d) social
5. The demand of productive factors comes from ................. .
(a) consumers (b) producers (c) pricing (d) owners
6. The relation of price theory relates to .................. use.
(a) factors (b) distribution (c) less consuming (d) appointment
7. In the real world, full employment is not real but .................. .
(a) unreal (b) exception (c) employment (d) analysis
8. Microeconomics is the key of .................. economical analysis.
(a) unreal (b) full (c) exceptional (d) successful
Microeconomics is based on the partial equilibrium, which helps to clarify the constant terms of a
person, a firm, a company and a resource. On the other hand, macroeconomics is based on general
equilibrium, which helps in studying the various economical conditions and their relations.
In microeconomics, the study of equilibrium terms happens in a specific period. This period does not
describe any entity. Thus, microeconomics is a static condition. On the other hand, macroeconomics is
based on the time lags, laws of changes and pricing. So it relates to the detailing of things.
The microeconomics is used for wide range of conditions, problems, markets and the different types
of associations. It relates to recognition and methodology which helps to get solutions of problems.

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