![]() Macroeconomics focuses on the bigger picture like the effects of a policy on national, regional, or international economy. Given the small scale nature of microeconomics, individuals and businesses can apply its principles to better their bottom-line. For instance, by selecting one career, you gain some benefits, but lose others. Simply put, the opportunity cost is concerned with the value you lose when you choose one item over another. Opportunity cost is one of the principles that individuals apply in studying their own choices and their consequences. Individuals also apply microeconomics to predict the effects of the decisions they make. In such a case, what would happen to production price and the price of products? This is one of the questions that micro economists seek to answer. Another company might decide to raise wages to a group of productive employees and fire a group of less productive employees. Raised salaries raise the cost of production and consequently the price of products. Results on microeconomic studies are dictated by low-level decisions taken by individuals or businesses.Īn excellent example of this would be a company raising salaries for its employees. Some economists describe it as the study of behavior from the grassroots level going up. Microeconomics seeks to address issues that affect individuals on a day-to-day basis. Unemployment, for instance, through a macroeconomic aspect, affects individual buying habits, an element that falls under the field of microeconomics. There are many more fields studied under macroeconomics that ultimately affect individuals and businesses. In a time of high inflation, businesses are forced to sell goods or services at a higher price and also pay their employees higher to meet the high cost of living. While this might seem like an area that is purely under macroeconomics, inflation raises the price of goods and services, thereby affecting individuals and businesses. There is a horde of variables contributing to inflation including increased money supply and low interest rates. In reality, however, the two fields are nearly indistinguishable as the issues studied may overlap at more than one instance.įor instance, inflation is widely studied under macroeconomics. Interdependence between Micro and Macroeconomicsįrom the simple explanations above, these two fields of economics might sound very different. Here, fields such as imports and exports, unemployment rates and GDP are covered.īoth of these fields will use the same principles and formula, but microeconomics deals with an economy at a small scale while macroeconomics deals with a far larger scale. ![]() On the other hand, macroeconomics deals with the economy in its entirety. ![]() These issues include supply and demand of a given product, production levels of a company or individual and regulations that affect a market. Issues that affect individuals, companies, or markets are studied at the microeconomic level. The main difference between the two is easy while microeconomics is the study of an individual, a group, company, or market, macroeconomic involves the study of the national or international economy as an aggregate of all the individual agents studied in microeconomics. Is microeconomics different from macroeconomics? These two economic branches may at first seem confusing, especially factoring that they overlap in so many areas, but once you understand the aspects covered in each through macroeconomics answers, you'll find them easy to differentiate.
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