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Answer» The differences between micro and macro-economics are given below: | Micro economics | Macro economics | | (i) Micro economics studies economic relationships or economic problems at the level of an individual, an individual firm, an individual household or an individual consumer. | Macro economics studies economic relationships or economic problems at the level of the economy as a whole. | | (ii) Micro economics is basically concerned with determination of output and price for an individual firm or industry. Accordingly, micro economics is briefly referred to as the theory of price. | Macro economics is basically concerned with determination of aggregate output and general price level in the economy as a whole. Accordingly, macro economics is briefly referred to as the theory of income and employment. | | (iii) Study of micro economics assumes that macro variables remain constant, e.g., it is assumed that aggregate output is given while we are studying determination of output and price of an individual firm or industry. | Study of macro economics assumes that micro variables remain constant, e.g., it is assumed that distribution of income remains constant when we are studying the determination of aggregate output and income level. | | (iv) Market mechanism plays a significant role in the context of micro economic problems, like the problem of product pricing Or factor pricing. | Government plays a significant role in the context of macro economic problems like the problems of unemployment, poverty and inflation. |
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