Page 1 of 4

how macroeconomics is different from microeconomics.

Continues for 3 more pages »
Read full document

how macroeconomics is different from microeconomics.

  • By
  • October 18, 2013
  • 1218 Words
  • 14 Views
Page 1 of 4
Explain briefly how macroeconomics is different from microeconomics. Please give examples.

What is economics? Before we start to learn about economics, we have to understand that what is the different between macroeconomics and microeconomics. Macroeconomics and microeconomics are the main branches of economics. (Karl E. Case, Ray C. Fair and Sharon M. Oster (2012): Principles of Economics, 10th ed. Global Edition, Chapter 1). And, I will describe that with examples. Microeconomics seems likes the “trees”. It studies and focuses on one unit at the same time, like the firm, the industry and the household. Nevertheless, macroeconomics seems like the “forest”. It is because it studies and analyses the whole economics, the sum of these.

First of all, Microeconomics examines the functioning of individual industries and the behavior of individual decision – making units, typically firms and households.( Karl E. Case, Ray C. Fair and Sharon M. Oster (2012): Principles of Economics, 10th ed. Global Edition, Chapter 1) It also analyses about the individual producers – that is how to allocate limited resources in the production of various commodities to make the maximum profits. Furthermore, microeconomics studies how households and firms make choices, how they interact on the market and how the government tried to influence their choice. Microeconomics concerned about people's decisions and behaviors, that how to affect the supply and demand by goods and services. For example, who is responsible for determining prices and also how to determine the supply and demand by goods and services. Microeconomics would be more focus on examine one aspect of the economic behavior. Nevertheless, it will neglect the interaction with the rest of the economy in order. It is for keep the simplicity of the analysis. In my opinion, i think the important thing in microeconomics, that is microeconomics always ignore other problems during analysis the individual research. When...