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Answer» The main differences between micro and macro-economics are as given below : | Basis of Difference | Micro-economics | Macro-economics | | 1. Sphere | Micro-economics studies individual units, i.e. person, firm, family, industry, etc. and their problems. | Macro-economics studies total consumption, total investment total national income, etc. on total economy level. | | 2. Assumption | In micro-economic studies, all macro-variables are taken to be constant. | In macro-economic studies, all micro-variables are taken to be constant. | | 3. Objective | Its main objective is the best (optimum) distribution of resources. | Its main objective is the complete utilisation and development of resources. | | 4. Main problem | Its main problem is price determination. | Its main problem is determination of income and employment. | | 5. Tool | Its tool is demand and supply. | Its main tool is the total demand and total supply of the economy. | | 6. Change | Micro-changes can occur in constancy of macro-factors. | The stability of macro-factors is not affected by changes in structure of micro-factors. | | 7. Contradiction | Savings are beneficial for micro-levels. | Savings are not beneficial for macro-levels. | | 8. Relationship | Micro-economics is related to an individual firm or industry and its production and determination of price. | Macro-economics is related to the total production and general price level determination in total economy. |
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