Micro vs Macro Economics
The main difference between Micro and Macro Economics lies in the fact that while microeconomics analyzes small firms and individuals, macroeconomics analyzes the economic issues as a whole. Microeconomics deals with demand and supply whereas macroeconomics deals with the productive capacity of the economy.
The study is about the behavior and decisions that affect the distribution of scarce resources.
There are several concepts of microeconomics. The three main ones are:
- Production theory – It is the study of production where producers try different methods to reduce the cost of production and increase the profit.
- Utility theory – This theory depends on consumers where consumers decide to purchase goods that they think would increase their happiness or utility.
- Price theory – Production theory and utility theory together determine the theory of supply and demand or price theory. This theory determines the price of a product in the market.
Who is the father of Microeconomics and Macroeconomics?
There are two great economists who are considered as the father of micro and macroeconomics. The first one is Adam Smith who is regarded as the father of microeconomics.
Second is John Maynard Keynes [pronounced as ‘Cairns’] who is regarded as the father of macroeconomics.
Are taxes Micro or Macro Economics?
Microeconomics focuses more on individuals and firms. It also includes focusing on the taxes they are paying. Hence, taxes can be considered as microeconomics.
Give examples of Micro and Macro Economics?
Microeconomics deals with the study of small businesses and individuals.
Some examples are:
- Studying the cost of production of goods and revenue generated after selling the same goods.
- Determine the cost of the product and revenue generated with it.
- Study supply and demand for goods.
- Study utility of a consumer’s satisfaction.
Macroeconomics studies the problems of an economy as a whole and do not focus on each and every individual or small business.
Some fine examples of macroeconomics are:
- The study of GDP, PPP, NNP, etc because these factors determine the national income of an entire country and not just one individual.
- Study of inflation and deflation and try to figure out means to control them.
- Study demand and supply on a national scale.
- Employment and unemployment rate in a country.
- Government expenses and income.
- Money supply and interest rates.
Having belabored these two terms, we are now confident that you have what it takes to distinguish clearly between the two of them. Go ahead now to make good use of them. Could it be that there are issues you still do not comprehend? Kindly let us know. We are always eager to offer additional explanations.