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Differences between macroeconomics and microeconomics

December 8, 2019
Differences between macroeconomics and microeconomics

In economics, as in all sciences, we must establish different sections so that when studying it, it will be simpler and more organized. The first division that is usually done is to distinguish between microeconomics and macroeconomics. So you don’t have any problem understanding them and to help you study economics, here we explain the differences between microeconomics and macroeconomics.

What is macroeconomics?

The Macroeconomics is the part of the economy that is responsible for studying the overall economic performance and economic policies carried out in large scale, for example in a country. That is, it encompasses society as a whole functioning at once, not independently.

Some of the most used variables are the Gross Domestic Product, the unemployment rate, the tax levels or the interest level, among others.

What is microeconomics?

The microeconomics is the part that is responsible for the behavior of each economic agent individually, such as families, companies or workers.

It analyzes exhaustively laws such as supply and demand, among consumers and suppliers, the price level, or the elasticity of each product. That is, how to reach an agreement between the needs of consumers and companies that offer goods and services , as well as all the “psychological” variables that may affect, how the quality of the product or the different needs of each person .

Differences between macroeconomics and microeconomics

From the previous definitions we can highlight several differences that help us distinguish them:

  • The macro looks for a general perspective and the micro an individual perspective.
  • The first of these studies global economic actors, how a country, and the second concrete, as a consumer.
  • The variables used are very different, for example, in macroeconomics, GDP observes the total production of a country and in microeconomics the quantity produced by a single company.
  • There are situations that affect macroeconomics and not microeconomics, and vice versa. For example, a new very cheap car model will affect microeconomics variables but not macroeconomic ones.
  • Although they are very different, they are not totally independent and we need both to understand the economy.