Distinction between micro¯o-economics

Micro-economics is the study of.Individual units on the country,macro-economics is the study of all the units combined together or the economy as a whole.But the distinction between them is not clear-cut.Micro is one situation may be micro in another situation.For example,national income is a macro concept in the context of a country but is a micro concept in the international context.The main points of difference between them are as follows.

1. Literal meaning :The team micro-economics was derived from the Greek word 'mikros'meaning small.Likewise,the team ,macro-economics was also derived from the Greek word 'makros' meaning large.
2. Study of aggregate variables :Since micro-economics is the study of individual units it includes the study of the price of a commodity.Income of an individual,output of a firm,demand and supply of a commodity.
3. Study of aggregates is relation to economy as a whole:Micro-economics also studies the small aggregates such as market demand,market supply,industry and so on.But these aggregates are no related to the economy as a whole.
4. Partial and general equilibrium analysis:Micro-economics studies the individual equilibrium process by using partial equilibrium analysis.It focuses on the study of particular consumer,firm,demand,output,price and expenditure.On the other hand,macro-economics uses general equilibrium analysis for the study of the economic behavior of the economy as a whole.
5. Scope of micro and macro-economics :Micro-economics covers the areas such as the pricing of the products.Pricing of factors of production,theories of economic welfare and so on.Macro-economics,on the other hand covers the areas as such as theories of income and employment,theories of money and price level.
6. Assumption of full employment :Micro-economics assumes full employment of all factors including labour.Hence,it takes total employment,total output,total expenditure as given.Micro-economics does not assume full employment.Hence,it regards the variables like total employment,total output etc.
7. Solution of present day problem :The study of micro-economics is not of much help to solve the important present day problems such as decline in national income,hyper inflation,widespread unemployment and so on.
8. Development of micro and macro-economics :Micro-economics was developed mainly by classical and neo-classical economists.They had confined economics analysis to the study of individual aspect of economic behavior.They used to generalise the results of individual analysis to explain the aggregate behavior of the whole economic system.
9. Objective:Micro-economics has the utility maximisation objective on the demand side not profit maximisation objective of the supply side.On the other hand,macro-economics has the objective of full employment,price stability,economics growth,favourable balance of payment.
   
10. Statics and dynamic analysis:Micro-economics studies the equilibrium at a particular point of time.It does not explain the time factor.Hence,micro-economics is regarded as the static analysis.On the other hand,macro-economics is based on time-lag,rate of change,past and expected value of variable.
11. Basis :Price mechanism is the basis of micro-economics.The price mechanism is operated by the forces of demand and supply.These forces help to determine the equilibrium price.On the other hand,national income,output and employment are the basis of macro-economics.