Distinguish between micro-economics and macro-economic (Dec 2012)

Q. Distinguish between micro-economics and macro-economic (Dec’12).

Difference between Microeconomics and Macroeconomics:

Microeconomics	Macroeconomics
1. It is that branch of economics which deals with the economic decision-making of individual economic agents such as the producer, the consumer, etc	1. It is that branch of economics which deals with aggregates and averages of the entire economy, e.g., aggregate output, national income, aggregate savings and investment, etc.
2. It takes into account small components of the whole economy.	2. It takes into consideration the economy of any country as a whole.
3. It deals with the price-determination in case of individual products and factors of production.	3. It deals with general price-level in any economy.
4. It is known as price theory (since it explains the process of allocation of economic resources along alternative lines of production on the basis of relative prices of various goods and services).	4. It is also known as the income theory (since it explains the changing levels of national income in any economy during any particular time period).
5. It is concerned with the optimisation goals of individual consumers and producers (e.g., individual consumers are utility-maximisers, while individual producers are profit-maximisers).	5. It is concerned with the optimisation of the growth process of the entire economy.
6. It studies the flow of economic resources or factors of production from any individual owner of such resources to any individual user of these resources, etc.	6. It studies the circular flow of income and expenditure between different sectors of the economy (say, between the firm sector and household sector).
7. Microeconomic theories help us in formulating appropriate policies for resource allocation at the firm level.	7. Macroeconomic theories help us in formulating appropriate policies for controlling inflation (i.e., rising price-level), unemployment, etc.
8. It takes into account the aggregates over homogeneous or similar products (e.g., the supply of steel in an economy).	8. It takes into account the aggregates over heterogeneous or dissimilar products (say, the Gross Domestic Product of any country during any year.